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
Related questions
Question
Answer Part-3
Aramit Cement and Meghna Cement have the following assets in portfolio and returns of the assets are following.
|
|
Return of Aramit Cement |
Return of Meghna Cement |
Probability |
|
Beverage |
-13.5% |
-16.5% |
22% |
|
Steel mills |
26.75% |
31% |
24% |
|
Shipping lines |
31% |
25.5% |
30% |
|
Consumers |
27% |
27.5% |
24% |
- Calculate the Return, Risk and CV of the portfolio and justify your decision for which portfolio to be selected, and interpret your findings.
- Define different types of systematic risk and idiosyncratic risk with examples in the context of Bangladeshi firms to operate a business.
- Define constant growth model? Differentiate between independent and mutually exclusive projects with examples.
Expert Solution
Step 1
Constant growth model is a model that values a company on the assumption that the dividends will continue to grow at a constant rate.
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