QUESTION TWORisk and Return Relationship1. A stockbroker calls you and suggests that you invest in the Lauren ComputerCompany. After analyzing the firm's annual report and other material, you believe thatthe distribution of rates of return are as follows:Possible rate of returnProbability-0.600.05-0.300.20-0.100.100.200.30Page 2 of 20.400800.200.15Compute the expected return [E (Ri)] on Lauren Computer stock.(15 Marks)3. The following are the historic returns for the Chelle Computer Company:YearChelle ComputerGeneral Index1371529133-111448-951112Based on this information, compute the following:a. The correlation coefficient between Chelle Computer and the General Index.b. The standard deviation for the company and the index.c. The beta for the Chelle Computer Company.

Compute the expected return E(R) on Lauren Computer stock.E(R) = Σ (Possible return ×…

Answered: QUESTION TWO Risk and Return…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 85PSB

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Exercise 2: You are evaluating the investment in two companies whose past ten years' return are shown below: Salalah Mills Oman Mills X2 Year X 1 7 49 4 4 16 81 3 -3 -2 4 36 1 1 5 8 64 25 ΣΧ15 E X? =115 N= ΣΧ-22 Σχ174 Calculate the Average Return and Risk of each company's return? Which of the two companies are more risky and why?
Suppose you had the following propositions of returns from two companies W and Y: Company Returns (OMR) Comments W 475 Company W proposes to give OMR 475 today Y 550 Company Y proposes to give you OMR 550 but after 2 years You also know that the Interest Rate is by 10%. Question: In which company do you choose to invest your money and why? (Use two formulas (ways) and also use Tables to make sure your answers are correct).
An analyst is studying the company LEMO in order to make an investment decision. The investor's estimates of Free Cash Flows to Firm (FCF), levels of debt and net Financial Expenses (FE) of the company are presented in Table 1. Table 1 Year 2020 Year 2021 | Year 2022 | Year 2023 Year 2024 Year 2025 FCF €10000 €11300 €10950 €12500 €12750 Level of €1000 €1200 €1450 €1350 €1600 €1675 debt FE €70 €90 €100 €108 €115 Additionally, the analyst has made the following assumptions: (i) risk-free interest rate: 1.5 %; (i) target capital structure: debt/(debt + equity) ratio of 45%; (ii) equity risk premium: 6%; (iv) asset beta: 1.15; and (v) tax rate: 20%. The number of shares of the company is 1 2000 and the current market price of LEMO is €8.0 per share. Present your result rounded to one decimal place. a. Compute the yearly Equity Free Cash Flows (EFCF) for the period from 2021 until 2025. Explain your answer. b. Assume the expected nominal growth rate of the EFCF in perpetuity is 1.25%.…
Need help with this exercise, with clear formula please
Q4b Please provide a detail work out for Q4b
NOTE: based on the info given please solve the question .
Question 2 Kamet is an investment fund that invests on the Ghana Stock Exchange. In recent times the economy has gone through four different cycles which analyst believe may be repeated in the years ahead. Kamet is reviewing its investment strategy and is looking for the best way to make good returns for its clients. The returns on three assets selected by Kamet are provided below: Business Cycle Normal Boom Near Recession Recession You are required to: Probability 0.30 0.40 0.10 ???? Unilever 40% 20% 20% 12% Starwin 40% 45% 30% 50% Anglogold 30% 40% 15% 30% i. Compute the expected return and risk of each asset and advise Kamet as to which asset to invest more funds in on the basis of: a) expected return on the assets b) riskiness of the assets (Hint: compute the coefficient of variation of each asset and select the asset with the lowest coefficient of variation; CV=. 8 E(R)
seeking investment for their development project. In which company would you invest The following table represents the annual trend of net profit of two different compane money, justify your Solution by using necessary statistical tool. Net profit in millions Company - A 16 32 Company - B 16 Year 2001 2002 2003 16 22 36 40 2004 2005 24 40 40 2006 2007 32 44 88 48
Question 2 Kamer is an investment fund that invests on the Ghana Stock Exchange. In recent times the economy has gone through four different cycles which analyst believe may be repeated in the years ahead. Kamet is reviewing its investment strategy and is looking for the best way to make good returns for its clients. The returns on three assets selected by Kamet are provided below: Business Cycle Normal Boom Near Recession Recession You are required to: i. Compute the expected return and risk of each asset and advise Kamet as to which asset to invest more funds in on the basis of a) expected return on the assets b) riskiness of the assets (Hint: compute the coefficient of variation of each asset and select the asset with the lowest coefficient of variation; CV= B(RY Kamet has just informed you of three strategies (a). (b) and (c) that it wants to use. (a) In this strategy. Kamet will invest in the order of expected retum hence the highest proportion of its funds is to be invested…
I want accurate answer with proper explanation for all questions I'll upvote
hi there tutor. im here to cure my doubts. i hv a ques to ask. please help solve. investment management Required: Based on the table, calculate holding period return (HPR) for the 3 investment alternatives. Based on your answer in (a), which investment should you choose and why? Describe 2 advantages and 2 disadvantages of international diversification. thats all. thank you tutor!

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