Question 2The following is the information for securities of ABC plc and XYZ plc:XYZ plc26401.25ParticularsExpected returnStandard deviationBetaABC plc25420.85The correlation coefficient between the returns of the two securities is 0.70 andstandard deviation of the market return is 20%.Required(a) As a new graduate accountant, CPA(T), determine if it is better to invest insecurities of ABC plc or XYZ plc(b) If the proportional of investment in ABC plc is 40% and that in XYZ plc is 60%determine the expected rate of return and portfolio standard deviation(c) Determine the risk free rate

In the given case, we have provided the securities expected return and their respective risk…

Answered: Question 2 The following is the…

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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Question 6 According to the Capital Asset Pricing Model (CAPM), underpriced securities: A) above the SML B under the SML C expected return will rise D share price will fall 1
V1
None
Report the beta of each stock and demonstrate a clear understanding of the concept of market efficiency.
Please help correctly all or skip pls
1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the information from the table (performance): A B 0.82 1.22 42.07 Year 1 2 3 4 5 6 7 None of the options is true X -7 -11 21 15 8 9 -2 Market 7 15 20 17 10 7 -1
Step by step explaination (use attached diagram) This question relates to Diagram 6 from the diagrams, which shows the probability distributions of returns for Shares N, P and Q. In which share would a risk-averse investor be most likely to invest? Select one: a. Share N b. Share P c. Share Q d. We need more information about the investor's risk tolerance to determine which share the investor would prefer.
Question 3 A portfolio consisting of 5 securities could have its beta factor computed Security % of portfolio Beta factor of A B с D E 20 10 15 20 35 security 0.90 1.25 1.10 1.15 0.70 as follows: Weighted beta factor 0.180 0.125 0.165 0.230 0.245 If the risk-free rate of return is 12% and the expected return on the market is 20%. Determine the expected return of this portfolio.
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter 0 wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Security Expected Return Standard Deviation Correlation* Beta Firm A 0.120 0.21 0.96 Firm B 0.130 0.40 1.51 Firm C 0.111 0.76 0.25 YOU The market portfolio 0.12 0.21 ma The risk-free asset 0.05 a.
Baghiben
Stock A Stock B 1 0.09 0.06 2 0.05 0.01 3 0.15 0.05 4 5 -0.04 0.08 0.01 -0.04 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.44, what is the expected return and standard deviation of a portfolio of 59% stock A and 41% stock B?
An informed and prudent investor uses a variety of measures such as financial ratios, book value, earnings per share, return on equity etc. to evaluate the worthiness and prospects of stocks he/she would invest in. It is important for you as an investor to understand how these values are calculated and what do they mean. Use the following tables to assess the worthiness of Verticon stock as an investment. Verticon Stock Data (Current and Historical) 2:12PM EDT Aug 16, 2011 Price 18.85 USD Change +0.64 (+3.51%) Mkt cap 147.1B Div/yield 0.20/4.24 Shares 8,012 Beta 0.70 Book/share 11.335 PE ratio 17 12/2010 12/2009 12/2008 (Millions of Dollars) Total Assets 195,014 195,949 111,148 Total Liabilities 107,201 122,935 53,592 Preferred Shareholders’ Equity 52 61 73 Common Shareholders’ Equity 87,761 72,953 57,483 Shares Outstanding 8,012 8,070 6746 Book/Share ? 9.040 8.521 Q1 (Mar ’11) 2010 Net profit…

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