Consider that you have $4,332,989 to invest across three assets using the price weighted methodology.Your analysis of these assets has provided the information in the two tables below.(Note: numbers in red are negative)AssetPrice at beginning of the year (in $)Expected price at the end of the year (in$)Standard deviation (%)CorrelationABCA1.000.840.78c. In dollars and cents, what is the expected value of this portfolio after 12 months?d. What is the standard deviation of this portfolio, in percentage terms?AB155.55 137.22182.22164.7742.11Requireda. What is the expected compound annual growth rate of return for this portfolio, in percentage terms?b. What is the expected continuously compounded return on this portfolio in percentage terms?B0.841.000.4441.50с0.780.441.00C88.14104.1242.33

A price-weighted portfolio is a type of investment portfolio in which the securities or assets are…

Consider that you have $4,332,989 to invest across three assets using the price weighted methodology. Your analysis of these assets has provided the information in the two tables below. (Note: numbers in red are negative) Required Asset Price at beginning of the year (in $) Expected price at the end of the year (in $) Standard deviation (%) Correlation A B C A 1.00 0.84 0.78 A 155.55 182.22 42.11 B 0.84 1.00 0.44 B 137.22 164.77 41.50 C 0.78 0.44 1.00 C 88.14 104.12 42.33

Consider that you have $4,332,989 to invest across three assets using the price weighted methodology. Your analysis of these assets has provided the information in the two tables below. (Note: numbers in red are negative) Required Asset Price at beginning of the year (in $) Expected price at the end of the year (in $) Standard deviation (%) Correlation A B C A 1.00 0.84 0.78 A 155.55 182.22 42.11 B 0.84 1.00 0.44 B 137.22 164.77 41.50 C 0.78 0.44 1.00 C 88.14 104.12 42.33

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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Two capital assets display the following: E(RA) = 12% σA = 1.5% E(RB) = 15% σB = 1.0% If asset A´s return is 5% below the Capital Market Line (CML), and asset B´s return is 1% below the CML, what is the equation of the CML? a) E(Ri) = 0.1203 − 0.02σi b) E(Ri) = 0.09 + 2σi c) E(Ri) = 0.1227 + 0.02σi d) E(Ri) = 0.15 − 2σi e) E(Ri) = 0.14 + 2σi
Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset R in State Return on Asset S in State Return on Asset T in State Boom 0.25 0.020 0.270 0.490 Growth 0.35 0.020 0.110 0.280 Stagnant 0.22 0.020 0.140 0.020 Recession 0.18 0.020 −0.030 −0.150 a. What is the expected return of each asset? b. What are the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with equal investment in all three assets? d. What is the portfolio's variance and standard deviation using the same asset weights in part (c)? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. a. What is the expected return of asset R? (Round to four decimal…
Determine the future value of the following single amounts (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) (Round your final answers to nearest whole dollar amount.): Invested Amount Future Value 1. 14,000 7% 15 2. 21,000 6% 16 3. 33,000 12% 15 54,000 5% 11 4.
Which of the following methods should be used when the expected benefits to be received from an asset will decline each period? a. Straight-line b. Units-of-production c. Sum-of-the-years'-digits d. Compound-interest
Use the information from this table to find the standard deviation for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%
Average Rate of Return, Cash Payback Period, Net Present Value Method for a Service Company Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost of $288,000. The equipment has an estimated life of 10 years and no residual value. It is expected to provide yearly net cash flows of $36,000. The company's minimum desired rate of return for net present value analysis is 12%. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Compute the following: a. The average rate of return, giving effect to straight-line depreciation on the investment. If required, round your answer to one decimal place. 8 X %
Can I get some help with this practice question
) Assuming a 9% cost of capital, find the modified internal rate of return for the following cash flows: a. 19.78% b. 6.95% c. 13.64% d. 7.86% Year Cash Flow 0 1 2 3 -$175 $167 $240 -$120
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For each of the investments below, calculate the rate of return earned over the period. Cash Flow During Period - $900 14,000 5,000 70 1,500 (Click on the icon here in order to copy the contents of the data table above into a spreadsheet.) Investment A B C D E Beginning-of-Period End-of-Period Value Value $1,400 140,000 55,000 500 14,000 $400 115,000 49,000 200 12,600
An investment earns 7% the first year, earns 12% the second year, and loses 10% the third year. The geometric average return over the three years was ________ Select one: a. 9.65% b. 2.55% c. 3% d. 3.59% e. 9.67%

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