Question 1 The following are annual rates of return for T-bills in Ghana and Share on the Ghana Stock exchange Year T-bill Shares on Ghana Stock Exchange 2016 0.063 0.150 2017 0.081 0.043 2018 0.076 0.374 2019 0.090 0.192 2020 0.085 0.106 a. Compute the arithmetic mean rate of return and standard deviation of rates of return for the two series. b. Discuss these two alternative investments in terms of their arithmetic average rates of return, their absolute risk, and their relative risk. Compute the geometric mean rate of return for each of these investments. Compare the arithmetic mean return and geometric mean return for each investment and discuss the difference between mean returns as related to the standard deviation of each series.

Question 1 The following are annual rates of return for T-bills in Ghana and Share on the Ghana Stock exchange Year T-bill Shares on Ghana Stock Exchange 2016 0.063 0.150 2017 0.081 0.043 2018 0.076 0.374 2019 0.090 0.192 2020 0.085 0.106 a. Compute the arithmetic mean rate of return and standard deviation of rates of return for the two series. b. Discuss these two alternative investments in terms of their arithmetic average rates of return, their absolute risk, and their relative risk. Compute the geometric mean rate of return for each of these investments. Compare the arithmetic mean return and geometric mean return for each investment and discuss the difference between mean returns as related to the standard deviation of each series.

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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Answer the following questions based on the given information from table of probabilitydistributions and rate of return investment of two companies namely; Celecom Bhd. andPos Selaju Bhd. shares below:Table 2: Probability distributions and rate of returns for Celecom Bhd. and Pos Selaju Bhd. State of Economy Probability of the States Return (%)Celecom Bhd. Return (%)Pos Selaju Bhd.Boom 0.30 25 40Normal 0.50 20 10Recession 0.20 15 20 (i) Solve for the expected rate of return for Celecom Bhd. and Pos Selaju Bhd.shares.(ii) In your opinion, which share is more worth the profit for investment and why?
II. Show your solution 1. For each of the following Treasury Bills, calculate the discount basis yield and the investment yield: T-Bill Maturity Price per $100 Discount Yield Investment Yield A 128-day 97.9323 B 91-day 98.7312 C 28-day 96.8931 D 182-day 99.1236 E 91-day 95.7821
Comment on whether or not if the ratios are favourable or unfavourable Current Ratio 2016 2017 2018 2019 2020 BHP 1.44 1.85 2.51 1.89 1.45 RIO 1.61 1.71 1.98 1.56 1.80 FMG 1.48 1.18 1.33 1.37 2.25
Question 1 All else held constant, which of the following would make the put option on the common stock more valuable? A lower exercise price Stock price drops Stock price volatility reduces
1. Term structure of interest rates and swap valuation Suppose the current term structure of interest rates, assuming annual compounding, is as follows: s1 82 83 84 S5 86 7.0% 7.3% 7.7% 8.1% 8.4% 8.8% What is the discount rate d(0, 4)? (Recall that interest rates are always quoted on an annual basis unless stated otherwise.) Please submit your answer rounded to three decimal places. For example, if your answer is 0.4567 then you should submit an answer of 0.457. Enter answer here
12. Canadian Treasury bills are yielding 2.81%. Inflation is 2.45%. What is the real rate of return on the Treasury bill? A. -0.18% B. 0.18% C. 0.36% D. 0.67% E. 1.80%
Compute for the answer and show your solution. 1. The following are annual rates of return for PHILIPPINES government T-bills and Singapore common stock. (10pts) Year 2014 2015 2016 2017 2018 Philippines 063 .081 .076 Singapore .150 .043 374 192 .090 .085 106 Compute the following for the series. a. arithmetic mean rate b. Variance c. Standard variation d. Covariance Given the above data, which is a better investment? Explain using the result of the data.
You are given the following information: Term (days) Rate DBP 180 6.00% 0.9709 360 6.20% 0.9416 540 6.40% 0.9124 720 6.60% 0.8834 What is the quoted fixed coupon rate?
The nominal rate of interest is 6% and the real rate of interest is 3%. What is the expected inflation rate? Oa. 2.51% Ob.4.91% Oc. 4.04% Od. 3.00% Oe. 2.91%
This is part a) question and it's answer in order to answer part b) question Question: You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? answer : According to the question we need to calculate the current price of the perpetual consol. Perpetual consoles are priced differently because their expected income is spread through an indefinite period. So, perpetual consoles are priced using the current yield. The current yield is calculated as:- coupon amountMarket price×100coupon amountMarket price×100 After calculating the current yield price is calculated by the above formula where, i = Current interest rate y = yield so, the price of this consol will be Price = i/y I please need the solutions for part b) question b) In the next period however, the interest rate changes unexpectedly to i . What is the new price of the bond? If…
8. Given the following information what must be the risk-free rate of interest (assume the asset is properly priced)? The expected return of the market is 14.25%, the stock's B is.82 and the expected return of the asset is 12.89%. A.5.91% B. 6.69% C. 7.41% D. 8.93%
1. (Yield curve) If yields on Treasury securities were currently as follows: Term Yield 6 months 1.00% 1 year 1.70% 2 years 2.10% 3 years 2.40% 4 years 2.70% 5 years 2.90% 10 years 3.50% 15 years 3.90% 20 years 4.00% 30 years 4.10% a. Plot the yield curve.b. Explain this yield curve using the unbiased expectations theory and the liquidity preference theory

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