19. Diversification. Here are the returns on two stocks. (LO11-3)Digital CheeseExecutive FruitJanuary+15+7February-3+1March+5+4April+7+13May-4+2June+3+5July-2-3August-8-2a. Calculate the variance and standard deviation of each stock. Which stock is riskier if held onits own?b. Now calculate the returns in each month of a portfolio that invests an equal amount eachmonth in the two stocks.c. Is the variance more or less than halfway between the variance of the two individual stocks?

Answered: Diversification. Here are the returns…

Diversification. Here are the returns on two stocks. (LO11-3) Digital Cheese Executive Fruit January +15 +7 February -3 +1 March +5 +4 April +7 +13 May -4 +2 June +3 +5 July -2 -3 August -8 -2

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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Given the following stock quotation, find the highest price during the last year. (Refer to Exhibit 20–3.) Pfizer PFE 15.52 16.22 15.67 15.83 0.50 3.26 38,228,171 19.95 13.72 0.73 4.61 14.8 −12.00 A. $15.83 B. $16.22 C. $19.95 D. $38.23
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EXCEL PROJECT AND EXCEL SOLUTION Consider the following stocks, all of which will pay a liquidating dividend in a year and nothing in the interim: Stock A Stock B Stock с Stock D Market Capitalization (5 million) 800 750 950 900 Expected Liquidating Dividend ($ million) 1000 1000 1000 1000 Beta PLEASE SHOW SOLUTIONS IN EXCEL 0.77 1.46 1.25 1.07 a. Calculate the expected return of each stock. b. What is the sign of correlation between the expected return and market capitalization of the stocks? In Problem 20, assume the risk-free rate is 3% and the market risk premium is 7%. a. What does the CAPM predict the expected return for each stock should be? b. Clearly, the CAPM predictions are not equal to the actual expected returns, so the CAPM does not hold. You decide to investigate this further. To see what kind of mistakes the CAPM is making, you decide to regress the actual expected return onto the expected return predicted by the CAPM.49 What is the intercept and slope coefficient of…
Am. 132.
You've collected the following information from your favorite financial website. 52-Week Price Lo 10.43 Acevedo 36 33.42 Georgette, Incorporated 1,54 69.50 YBH 2.00 14.09 Manta Energy .94 20.74 Winter Sports 32 Hi 77.40 55.81 130.93 50,38 35.00 Stock (Dividends Required retum Dividend Yield PE Ratio Close Price liet Change .24 2.6 3.0 2.2 6.0 4.5 6 10 10 60 13.90 40.43 68.97 15.57 22 -.01 3.07 .26 .18 According to your research, the growth rate in dividends for Manta Energy for the previous 10 years has been negative 14 percent. If Investors feel this growth rate will continue, what is the required return for the stock? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as o percent rounded to 2 decimal places, e.g., 32.16.
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place. 26. The historical stock returns for GAF, Inc. are listed below: Year -Annual Stock Return2013 -12%2014 14%2015 35%2016 2%2017 -16%2018 8%2019 0%2020 34%2021 12%2022 6% What is the standard deviation of returns for GAF, Inc. stock over the 10-year time period? (Compute the standard deviation assuming this is a population of returns, not a sample – that is, use the procedure describedin the textbook for calculating the standard deviation of a series of stock returns).27. The end of year stock price and the dividend paid each year for Maxwell, Inc. stock for years 0 through 6 arelisted in the table below: Year -End of Year Stock Price- Dividend0 $12.00 $ 01 $14.86 $1.802 $7.95 $1.883 $8.00…
The Bloomberg screen below shows the Nasdaq Index price over the last year. Describe the technical indicator used from the chartist and what trade signal it may suggest. CCMP €T On 03 CCMP Index 11/04/2020 Study RSI 1D 3D 1M 6M YTD 1Y 5Y Max Daily Volume 1.000B IRSI (14) on Close (CCMP) 75.3572 Nov C 15811.58 +161.98 Nov 0 15658.52 H 15821.58 L 15616.44 Prev 15811.58 94) Suggested Charts 96) Actions 97) Edit 11/04/2021 Last Px Local CCY Mov Avgs Period 14 Overbought 70 Oversold 30 1 Table + Compare ▾ Add Data Track Annotate News Zoom Key Events 2020 Dec Jan Feb Mar Apr May Jun 06/03/21 Jul Aug Relative Strength Index ไปได้ Sep Edit Chart * Oct 15811.5801 15013.0596 14198.1699 Last Price THigh on 11/03/21 Average 15811.5801 15821.5801 12000 13839.5049 Z-VOU 1 Low on 11/04/20 11394.21 11075.4473 ISMAVG (50) on Close 15013.0596 SMAVG (100) on Close 14805.082 SMAVG (200) on Close 14198.1699 13000 10000 3B 2B 1.000B -0 100 75.3572 -50 -0
Here are the returns on two stocks. January February March April May June July August Digital Cheese +14 -4 +6 +8 -5 +4 -3 -9 Executive Fruit +8 +2 +5 +12 +3 +6 w At t -4 -3 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? 4 b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is the variance more or less than halfway between the variance of the two individual stocks?
You've collected the following information from your favorite financial website. 52-Week Price Lo 10.57 33.42 Georgette, Incorporated 1.54 69.50 YBM 2.00 13.95 20.74 Manta Energy .80 Winter Sports .32 Hi 78.80 55.81 130.93 50.24 35.00 Stock (Dividend) Required return Acevedo .50 Dividend Yield % PE Ratio Close Price Net Change -.24 -.01 3.07 -.26 18 % 3.3 3.8 2.2 5.2 1.5 6 10 10 6 28 According to analysts, the growth rate in dividends for Acevedo for the previous 10 years has been 4 percent. If investors feel t growth rate will continue, what is the required return for the company's stock? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 15.30 40.43 88.97 15.43
You've collected the following information from your favorite financial website. 52-Week Price Lo 10.57 33.42 Georgette, Incorporated 1.54 69.50 YBM 2.00 13.95 20.74 Manta Energy .80 Winter Sports .32 Hi 78.80 55.81 130.93 50.24 35.00 Stock (Dividend) Required return Acevedo .50 Dividend Yield % PE Ratio Close Price Net Change -.24 -.01 3.07 -.26 18 % 3.3 3.8 2.2 5.2 1.5 6 10 10 6 28 According to analysts, the growth rate in dividends for Acevedo for the previous 10 years has been 4 percent. If investors feel t growth rate will continue, what is the required return for the company's stock? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 15.30 40.43 88.97 15.43
Given the following annual returns for Fort Corporation, Smith Industries and the market. Fort's Smith's Market Year Rate of Return (%) Rate of Return (%) Rate of Return (%) 2015 6 5 -3 2016 10 15 8 2017 11 15 20 2018 10 10 10 2019 13 10 5 Calculate the mean return of a portfolio formed from Fort stock and the Market (25% invested in Fort). 8% a. 8.5% 10.75% с. 40% d.

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