BU5201_Tut 5_Questions

Risk and return You are considering an investment in the stock market and have identified three potential stocks, they are Shanghai Fosun Pharmaceutical Group (HKG: 2196), China Petroleum & Chemical Corporation (HKG: 386) and Commonwealth Bank (ASX: CBA).  The historical prices between 2013 and 2020 in the table below, note that these prices are recorded on the 1st day of the year, for example, 1st of January 2020.  Students assume no dividend is distributed during this period and ignore the exchange rate conversion 1.Calculate the return and risk (standard deviation) of each stock.  Explain the relation (positive or negative) between risk and return based on your answers    2.Calculate the correlation coefficient between (a) Fosun and China Petroleum and (b) China Petroleum and CBA.    3.Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 50% in Fosun and 50% in China Petroleum.    4.Calculate the expected (annual) return and…

quiz 8-16

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The investment funds for your company includes the following: Stock $ Amount Invested Beta for Each Stock A $    600,000     .8 B $ 1,800,000     1.4 C $ 2,400,000     1.7 D $    700,000      -.6 E $ 3,000,000      1.1 You need to calculate the required rate of return for the investment. The market’s required return for Year 2020 is 12% and the risk free rate is 3% Show your work on the following: Calculate the average beta for the portfolio. Calculate the required rate of return for the entire portfolio. The CFO of your company is anticipating that the stock market will be decreasing in the near future. Please give a recommendation on which stock the company should sell and which stock the company should buy.  The CFO also wants you to explain your answer.

quiz 8-16

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Q2: A private investment club has $200,000 earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three categories: high risk, medium risk, and low risk. Management estimates that high-risk stocks will have a rate of return of 15%/year; medium-risk stocks, 10%/year; and low-risk stocks, 6%/year. The members have decided that the investment in low-risk stocks should be equal to the sum of the investments in the stocks of the other two categories. Determine how much the club should invest in each type of stock if the investment goal is to have a return of $20,000/year on the total investment. (Assume that all the money available for investment is invested.) Note: Develop the linear system of equations from the above theory and solve the system by Gauss Jordon Method.

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The book I use for study: Principles of Managerial Finance [Global Edition] 16th Edition. Chad J. Zutter & Scott B. Smart Questions in image

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Capital Assets Pricing Model (CAPM) (20 points) 4. You have landed an interview with Gold & Silver Bank, and they are asking you to calculate the expected return on a series of assets they are evaluating. They provide the data below and have sent you a few additional questions. Risk-free rate 5.26% Stock Expected Return Betas ALMM 45.32% 9.2 AIR 34.10% 5.1 BLUE 61.20% 3.7 87.20% 4.5 MON Given the expected return on an asset, E(Ri), is equal to the risk-free rate, Rf, plus the risk premium. - E(R)=R₂+ [E(RM) – Rƒ] × Bi What is each stock's expected return, E(Ri)? Provide the result as x.xx%.

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Finance   Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Do not provide Excel Screet shot rather use tool table Answer completely.

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Question content area top Part 1 ​(Capital asset pricing​ model)  ​Anita, Inc. is considering the following investments. The current rate on Treasury bills is 7 ​percent, and the expected return for the market is 12.5 percent. Using the​ CAPM, what rates of return should Anita require for each individual​ security?   Stock Beta H 0.71 T 1.62 P 0.89 W 1.37 ​(Click on the icon    in order to copy its contents into a spreadsheet.​)       Question content area bottom Part 1 a.  The expected rate of return for security​ H, which has a beta of 0.71​, is enter your response here​%. ​(Round to two decimal​ places.) Part 2 b.  The expected rate of return for security​ T, which has a beta of 1.62​, is enter your response here​%. ​(Round to two decimal​ places.) Part 3 c.  The expected rate of return for security​ P, which has a beta of 0.89​, is enter your response here​%. ​(Round to two decimal​ places.) Part 4 d. The expected rate of return for…

File Preview Problem 3: Stock Valuation (30 points) You work as a security analyst for a large investment firm. The portfolio manager has asked you whether it is a good idea to buy "ABC" stocks. The current stock price for "ABC" is $345 and the firm has just paid a $14 dividend. You have decided that the dividend discount model is appropriate for your valuation of ABC's stock. After carefully analyzing the firm and all relevant data, your best forecast is that the firm's dividends are expected to remain constant for the next five years. After that, dividends are expected to grow at 15% for 10 years. Following that, the growth is expected to be 3% forever. Assume that the required rate of return is 10%. A) What is the (theoretical) stock value based on the dividend discount model? B) Would you recommend buying the stock? Explain Hint: There are many ways to solve the problem. The simplest approach is to split it into two parts, find the value of each part, and then add the values…

Suppose the market risk premium is 5% and the risk-free interest rate is 5%. Using the data in the table here, a. Starbucks's stock. b. Hormel's stock. c. Avis Budget Group's stock. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Hormel 0.16 Avis Budget Group 2.55 Beta Starbucks 1.05 X " calculate the expected return of investing in

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SCHOOL OF BUSINESS ADMINISTRATION Corporate Financial Management FINC 401 Answer the following questions 1. Consider the following information: Rate of Return if State Occurs Probability of State of Economy State of Economy Stock A Stock B Recession .21 .06 -.21 Normal .58 .09 .08 Вoom .21 .14 .25 a. Calculate the expected return for Stocks A and B. b. Calculate the standard deviation for Stocks A and B. 2. Suppose a stock had an initial price of $74 per share, paid a dividend of $1.65 per share during the year, and had an ending share price of $61. a. Compute the percentage total return. b. What was the dividend yield and the capital gains yield? 3. Suppose you bought a bond with an annual coupon of 6% one year ago for $1,010. The bond sells for $1,025 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? b. What was your total nominal rate of return on this investment over the past year? 4. Consider the following information:…

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