Historical Realized Rates of ReturnYou are considering an investment in either individual stocks or a portíolio of stocks. The two stocks you are researching, Stock A and Stock B, have the folloving historical retums:Year2015-22.00%-4.00%201634.0017.00201729.00-15.002018-2.0046.00201930.0025.00a. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your ansvers to two decimal places.Stock A:Stock 8:b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been theaverage return on the portfolio during this period? Do not round intermediate calculations. Round your ansviers to bwo decimal places. Negative values, if any, should be indicated by a minus sign.YearPortfolio20152016201720182019Average returnc. Calculate the standard deviation of returns for each stock and for the portfolio. Do not round intermediate calculations. Round your ansvwers to two decimal places.FAPortfolioStd. Dev.d. Suppose you are a risk-averse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? Why?A risk-averse investor should choose -Select- vsince it offers -Select- vexpected return with -Select- v risk.

Given Years = 2015, 2016, 2017, 2018, 2019 FA = -22.00% , 34.00 , 29.00, -2.00, 30.00 FB = -4.00%,…

ates of Return You are considering an investment in ether indvidual stocka or a porfolo of stocka. The bvo stoda you are researching. Stock A and Stock B, have the folloving historical retums: Year -22.00% 4.00% 2016 34.00 17.00 29.00 -15.00 2018 -2.00 46.00 30.00 25.00 a. Calulate the average rate of retum for each stock during the S-yar pariod. Do not round intermedate calculations. Round your anovers to bre decimal places. Stock A Stock e b. Suppose you had held a portfolo consisting of S04% of Stock A and 50% of Stock B. What would have been the realzed rate of return on the portfolo in each year? What would have been the average retum on the portfolo during this period? Do not round intermediate calculations. Round your ansvers to bio decimal places. Negative values, if any, should be indicated by a minus sign. Year Portfolio 2015 2016 2017 2018 2019 Average retum

ates of Return You are considering an investment in ether indvidual stocka or a porfolo of stocka. The bvo stoda you are researching. Stock A and Stock B, have the folloving historical retums: Year -22.00% 4.00% 2016 34.00 17.00 29.00 -15.00 2018 -2.00 46.00 30.00 25.00 a. Calulate the average rate of retum for each stock during the S-yar pariod. Do not round intermedate calculations. Round your anovers to bre decimal places. Stock A Stock e b. Suppose you had held a portfolo consisting of S04% of Stock A and 50% of Stock B. What would have been the realzed rate of return on the portfolo in each year? What would have been the average retum on the portfolo during this period? Do not round intermediate calculations. Round your ansvers to bio decimal places. Negative values, if any, should be indicated by a minus sign. Year Portfolio 2015 2016 2017 2018 2019 Average retum

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

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financial advisor evaluates four stocks for inclusion in an investor's portfolio. A orrelation matrix showing each stock's correlation with the other stocks is shown below Stock ALK CMN BTY DLE ALK 0.40 0.58 1.00 -0.25 BTY 0.40 1.00 0.16 -0.04 CMN -.25 .16 1.00 .37 DLE .58 .04 .37 1.00 f the goal is to reduce the investor's overall portfolio risk, which two stocks should the advisor recommend? a. ALK and DLE b. ALK and CMN c. BTY and DLE BTY and CM
Consider the table given below to answer the following question. Year Asset value Earnings Net investment Free cash flow Return on equity Asset growth rate Earnings growth rate 1 9.00 1.44 1.44 0.00 0.16 0.16 Present value 2 10.44 1.67 1.67 0.00 0.16 0.16 0.16 million 3 4 5 12.11 14.05 15.87 1.94 2.54 2.25 1.94 1.83 2.06 0.00 0.42 0.48 0.16 0.16 0.16 0.16 0.13 0.13 0.16 0.16 0.13 6 7 17.94 20.27 2.78 2.33 0.45 0.155 0.13 0.09 3.04 2.03 1.01 0.15 0.10 0.09 8 9 22.30 24.53 3.23 2.94 2.23 2.45 1.00 0.49 0.145 0.12 0.10 0.10 0.06 -0.09 Assuming that competition drives down profitability (on existing assets as well as new investment) to 15.5% in year 6, 15% in year 7, 14.5% in year 8, and 12% in year 9 and all later years. What is the value of the concatenator business? Assume 13% cost of capital. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. 10 26.98 3.24 2.70 0.54 0.12 0.10 0.10
The cost of equity and dividends are known to the picture.calculate the value of Ve, according to the multi-period dividend discount model
(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time 1 2 3 12 4 14 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Asman $9 11 Salinas $30 27 32 36 The rate of return you would have earned on Asman stock from time 1 to time 2 is %. (Round to two decimal places.)
Your rate of return expectations for the stock of Kayleigh Cosmetics Company during the next year are: KAYLEIGH COSMETICS CO. Possible Rate of Return Probability −0.60 ............0.15 −0.30 ............0.10 −0.10 ............0.05 0.20 ............0.40 0.40 ............0.20 0.80 ............0.10 a. Compute the expected return [E(Ri)] on this stock, the variance (σ2) of this return, and its standard deviation (σ).
Treasury stock should be reported Group of answer choices in the Investments and Funds section of the balance sheet. as a deduction from total stockholders’ equity on the balance sheet. as a current asset only if it will be sold within the next year or the operating cycle, whichever is longer. as a current asset only if it will be sold within the next year or the operating cycle, whichever is shorter.
Find the annualized holding rate of return and the average rate of return for a stock that returned -30% in year 1 and +30% in year 2. Annualized holding rate of return = -7.00% A. -9.00% B. -15.00% C. 0.00%
Calculating Return Components An investor purchases one share of stock for $50. After one year, they sell the share for $55. During the year, they receive $7 in dividends. a) What was the dividend yield, in percentage terms? b) What was the capital gain from price appreciation on the stock, in percentage terms? c) What was the total return in dollars? What was the total return, in percentage terms?
You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year rA rB 2014 -20.00% -5.00% 2016 42.00 15.00 2017 20.00 -13.00 2018 -8.00 50.00 2019 25.00 12.00 a. Calculate the average rate of return for each stock during the 5-year period. b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? c. Calculate the standard deviation of returns for each stock and for the portfolio. d. Suppose you are a risk-averse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? Why?
Ranking investments by expected returns What makes for a good investment? Use the approximate yield formula or a financial calculator to rank the following investments according to their expected returns. Round the answers to two decimal places. Do not round intermediate calculations. Buy a stock for $45 a share, hold it for 3 years, then sell it for $75 a share (the stock pays annual dividends of $3 a share). % Buy a security for $25, hold it for 2 years, then sell it for $60 (current income on this security is zero). Do not round intermediate calculations. % Buy a 1-year, 12 percent note for $950 (assume that the note has a $1,000 par value and that it will be held to maturity). Do not round intermediate calculations. %
Using the return data on portfolios A and B provided in the accompanying spreadsheet, compute the return volatility for portfolio A. Round off your answer to three digits after the decimal point. State your answer as a percentage point, such as 1.234.
Table solution provide

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