A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing her returns to the return on the MSCI World Market Portfolio, but she is free to hold stocks from various countries in whatever proportions she finds desirable. Results for a given month are contained in the following table: Country U.K. Japan U.S. Germany Weight In MSCI Index 0.19 0.32 0.41 0.08 Manager's Weight 0.38 0.3 0.32 0 Manager's Return Return of Stock Index for That Country in Country 12% 20% 24 10 5 14 14 12 Required: a. Calculate the total value added of all the manager's decisions this period (Do not round Intermediate calculations. Round your answer to 2 decimal places. Negative amount should be Indicated by a minus sign.)

A global equity manager is assigned to select stocks from a universe of large stocks throughout the world. The manager will be evaluated by comparing her returns to the return on the MSCI World Market Portfolio, but she is free to hold stocks from various countries in whatever proportions she finds desirable. Results for a given month are contained in the following table: Country U.K. Japan U.S. Germany Weight In MSCI Index 0.19 0.32 0.41 0.08 Manager's Weight 0.38 0.3 0.32 0 Manager's Return Return of Stock Index for That Country in Country 12% 20% 24 10 5 14 14 12 Required: a. Calculate the total value added of all the manager's decisions this period (Do not round Intermediate calculations. Round your answer to 2 decimal places. Negative amount should be Indicated by a minus sign.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager's portfolio in column 1, the fraction of the portfolio allocated to each sector in column 2, the benchmark or neutral sector allocations in column 3, and the returns of sector indices in column 4. Equity Bonds Cash Actual Return 2.5% 1.5 0.7 Actual weight 0.3 0.5 0.2 Benchmark Weight 0.7 0.2 0.1 Index Return 3% (S&P 500) 1.8 (Barclay's Aggregate) 0.5 (T-Bills) a-1. What was the manager's return in the month? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.) The manager's return in the month is e-2. What was her overperformance or underperformance? (Do not round intermediate calculations. Input all amounts as positive values. Round your answer to 2 decimal places.)
Vijay
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company. Year 1 $ 62.18 40.30 2.35 a. High target price b. Low target price Year 2 $67.29 43.18 2.58 Year 3- $74.18 39.27 2.73 Year 4 $78.27 46.21 High price Low price EPS Earnings are expected to grow at 9 percent over the next year. 6. What is the high target stock price in one year? 32.16. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. b. What is the low target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. 2.890
You are a financial advisor and one of your customers tells you that, according to her, Company A is a successful Norwegian firm listed in the OSEAX index and undervalued in the market. She estimates that it has a CAPM alpha of 3% and a CAPM beta of 1.25. The risk-free rate is 1%. Due to her macroeconomic predictions, your client expects a decline in the Norwegian stock market index OSEAX, and she would like to still invest 20 million NOK in stock A while, at the same time, not being exposed to the market. You are asked to suggest and implement a trading strategy that achieves this goal. The OSEAX index currently sits at 1,250 points, and the multiplier for its futures contracts on the Norwegian stock exchange is 500 NOK. a. Without doing any computation, what level of average return can your client expect to receive if she implements your suggested strategy? Why? b. Without doing any computation, will your client be able to hedge all risks with this strategy? C. Perform this…
The stock market data is given in the following table. Correlation Coefficients Telmex Mexico World SD(%) R¯¯¯�¯ (%) Telmex 1.00 0.90 0.60 18 ? Mexico 1.00 0.75 15 14 World 1.00 10 12 The above table provides the correlations among Telmex, a telephone or communication company located in Mexico, the Mexico stock market index, and the world market index, together with the standard deviations (SD) of returns and the expected returns ( R¯¯¯R¯ ). The risk-free rate is 8%. Required: Suppose now that Telmex has made its shares tradable internationally via cross-listing on NYSE. Again using the CAPM paradigm, estimate Telmex’s equity cost of capital. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
A portfolio manager believes that credit spreads are mean-reverting in the medium term. The manager observes the following information about four corporate issues: Issue 1 2 3 4 O O 1 2 3 Current Spread (bps) 6 month mean spread 4 100 60 130 200 Based on this information, which issue is best to purchase according to mean reversion analysis? 90 90 110 220 6 month spread st.dev. 10 25 15 30
Bhupatbhai
Nikulbhai
How the Dow Jones Industrial Average Works The Dow Jones Industrial Average, also known as the Dow, is one of the most-watched stock indexes in the world. It is a price- weighted average made up of companies including Apple, Boeing, Coca-Cola, Johnson & Johnson, and Walt Disney. Many investors follow the activity of the Dow Jones Industrial Average to gauge whether the stock market as a whole has gone up or down. The Dow Jones Industrial Average was developed by newspaper editor Charles Dow and statistician Edward Jones at Dow Jones & Company in 1896 as a tool to see how the U.S. economy was doing day-to-day. Initially, the Dow launched with only 12 companies, mostly in the industrial sector because most of the economy was industrial at the time. Dow Jones & Company also created various other market averages. For example, the Dow Jones Transportation Average, the oldest stock index still in use, is a stock market index of the transportation sector. Today, the Dow is made up of 30…
Consider the following information regarding the performance of a money manager in a recent month. The table represents the actual return of each sector of the manager's portfolio in column 1 , the fraction of the portfolio allocated to each sector in column 2 , the benchmark or neutral sector allocations in column 3 , and the returns of sector indices in column 4. \table[[,Actual,Benchmark],[Return,Actual Weight,Weight,Index Return,],[Equity,2.2%,0.4,0.5,2.7%
Suppose that the index model for two Canadian stocks HD and ML is estimated with the following results: RHD =-0.03+2.10RM+eHD R-squared =0.7 RML =0.06+1.60RM+eML R-squared =0.6 σM =0.15 where M is S&P/TSX Comp Index and RX is the excess return of stock X. What is the standard deviation of each stock? (Hint: βi = (ρiM σi) / σM.)
Nikulbhai

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS