Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint: Find the standard deviations of asset M and of the portfolio equally invested in as M, N, and O. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) States Probability 25% Boom Asset M Return 12% 10% Normal Recession 4% 49% 26% Asset N Return 21% 14% 1% Asset O Return 4% 10% 12% - X

Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint: Find the standard deviations of asset M and of the portfolio equally invested in as M, N, and O. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) States Probability 25% Boom Asset M Return 12% 10% Normal Recession 4% 49% 26% Asset N Return 21% 14% 1% Asset O Return 4% 10% 12% - X

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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Using Microsoft Excel, create an investment cash-flow diagram that will have a present worth of zero using MARR = 14.5%. The study period needs to be exactly 8 years and each year should have at least one unique cash flow that is different from the cash flows over the other years. Your answer should contain a table showing the cash flows for each year and a graphical representation of the cash flows (cash-flow diagram).
Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: E. What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint: Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O. What is the expected return of investing equally in all three assets M, N, and O? % (Round to two decimal places.)
Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: a. What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O. b. Could Sally reduce her total risk even more by using assets M and N only, assets M and O only, or assets N and O only? Use a 50/50 split between the asset pairs, and find the standard deviation of each asset pair. a. What is the expected return of investir 8.40% (Round to two decimal places.) What is the expected return of investing % (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) States Probability 35% Asset M Return 10% Boom Normal 54% 7% Recession 11% -2% Asset N Return 21% 12% 1% Asset O Return - 2% 7% 10% X
Finance
State the return rate (in %) for your optimal portfolio.
Please show all work and formulas in excel please! The Table for the problem is attached. Table below shows the historical returns for Companies A, B and C If one investor has a portfolio consisting of 50% Company A and 50% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%? If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8% What would happen to the portfolio risk if more and more randomly selected stocks were added?
Problem #2: Consider an investment where the cash flows are: - $920.33 at time 1 = 0 (negative since this is your initial investment) S407 at time = 1 in years $222 at time = 2 in years $426 at time = 3 in years (a) Use Excel's "Solver" to find the internal rate of return (IRR) of this investment. Take a screen shot showing Solver open with your entries for the function clearly visible. Paste the screen shot into an application (like Paint), and save it as a (.png) file. Upload your screenshot below. (b) What is the value of IRR found by Solver?
You became a fund manager in UAlbany Bank. After research, you pulled up two potential assets to invest. The assets' anticipated gains per share next year are: Asset 1, 324 Asset 2,324 Asset 1, 14 Probability Which asset is riskier and what is its variance per share? Asset 2, 14 0.40 0.40 0.20 Asset 1 -$10 $20 $35 Asset 2 $10 $15 $5
answer in text form please (without image)
Rahul
Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during all possible circumstances. To compute an asset’s expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: James owns a two-stock portfolio that invests in Blue Llama Mining Company (BLM) and Hungry Whale Electronics (HWE). Three-quarters of James’s portfolio value consists of BLM’s shares, and the balance consists of HWE’s shares. Each stock’s expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table: Market Condition Probability of Occurrence Blue Llama Mining Hungry Whale Electronics Strong 0.25 27.5% 38.5% Normal 0.45 16.5% 22% Weak 0.30 -22%…
Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: What are her expected returns and the risk from her investment i three assets? How do they compare with investing in asset M alone? Hint. Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O. What is the expected return of investing equally in all three assets M, N, and O? % (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) States Boom Probability 27% Asset M Return 13% 10% Normal 48% Recession 25% 1% Asset N Return 23% 15% 3% Asset O Return 1% 10% 13% X

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