Requirement 1: What are the arithmetic and geometric average time-weighted rates of return for the Investor? (Round your answers to 2 decimal places. Omit the "%" sign In your response.) Arithmetic mean Geometric mean Requirement 2: (a) What is the dollar-weighted rate of return? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign In your response.) Rate of return (b) Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2007, to January 1, 2010. (Negative amounts should be Indicated by a minus sign. Omit the "$" sign in your response.) Year 2007 2008 2009 2010 Cash flow LA LA LA S

Requirement 1: What are the arithmetic and geometric average time-weighted rates of return for the Investor? (Round your answers to 2 decimal places. Omit the "%" sign In your response.) Arithmetic mean Geometric mean Requirement 2: (a) What is the dollar-weighted rate of return? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign In your response.) Rate of return (b) Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2007, to January 1, 2010. (Negative amounts should be Indicated by a minus sign. Omit the "$" sign in your response.) Year 2007 2008 2009 2010 Cash flow LA LA LA S

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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Hydro Ottawa has two options for upgrading a natural gas power station to meet new government standards. Option 1: Hydro Ottawa will make the upgrades themselves. This is expected to cost $12,700 at the end of each month for 12 years. At the end of the operation (in 12 years) Hydro Ottawa expects to sell all equipment needed for the upgrade for $122,000. Option 2: Pay experienced contractors. This will cost $28,000 up front and $13,900 monthly (at the end of every month) for 15 years. Assume all interest is 3.72% compounded monthly. Round the answers to NPV (Option 1), and NPV (Option 2) to the nearest dollar. Round all other answers to two decimal places where applicable. 1) Find the net present value of option 1: P/Y = C/Y = N = I/Y = PV = PMT= FV = Payments (Cost) GA % Sale of equipment (Residual) GA GA LA %
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Which of the following investments will experience the largest change in its market value as a result of changes in the level of interest rates (we are talking about the absolute value of the change, up or down)? Suppose interest rates go up or down by 50 basis points (0.5%). Rank the investments from 1 to 4 where a 1 is the most affected (largest absolute change in value) while a 4 is the least affected (smallest absolute change in value). A: $1 million invested in 3-month Treasury bills. 请选择~ B: $1 million invested in STRIPS (zero coupons) maturing in three years. |请选择 C: $1 million invested in a Treasury note maturing in three years. The note pays a 5% annual coupon. |请选择︾ D: $1 million invested in a Treasury note maturing in three years. The note pays a 10.0% annual coupon. |请选择

Consider the following table of annual rates of return, in percentage, for four common risky assets over the time period 2010 to 2019 • Berkshire Hathaway (ticker: BRK/A) • S&P 500 Index (ticker: SPX) • NASDAQ 100 Index (ticker: NDX) • Russell 2000 Index (ticker: RUT) YEAR BRK/A SPX NDX RUT 2010 21.4 15.1 19.22 26.85 2011 -4.7 2.1 2.7 -4.18 2012 16.8 16 16.82 16.35 2013 32.7 32.4 34.99 38.82 2014 27 13.7 17.94 4.89 2015 -12.5 1.4 8.43 -4.41 2016 23.4 12 5.89 21.31 2017 21.9 21.8 31.52 14.65 2018 2.8 -4.4 -1.04 -11.01 2019 11 31.5 37.96 25.52 Assuming there is no risk-free asset available, suppose you desire to invest in a portfolio of these 4 risky assets such that you minimize the portfolio variance, subject to the constraint that the portfolio weights sum to 1. Note that short positions (negative weights) are permissible. Using mean-variance portfolio optimization, determine the 4 minimum variance portfolio weightings and the minimum portfolio variance. Please enter your solutions in…
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Despite the different methods that may be used by investors to evaluate .4 the expected return, you should always adjust your return by inflation. .Assess the extent to which you agree with the statement
A portfolio manager summarizes the input from the macro and micro forecasters in the following table: Micro Forecasts Asset Stock A Stock B Stock C Stock D Expected Return (%) Beta Deviation (%) 1.3 1.6 1.1 1.2 21 18 17 10 Residual Standard Asset T-bills Passive equity portfolio 52 62 58 50 Macro Forecasts Expected Return (%) 6 15 Standard Deviation (%) 0 25 Calculate the following for a portfolio manager who is not allowed to short sell securities. If allowed to short sell securities, the manager's Sharpe ratio is 0.3924. a. What is the cost of the restriction in terms of Sharpe's measure? (Do not round intermediate calculations. Enter your answer as decimals rounded to 4 places.)
ion Given r and t greater than zero: I. Present value interest factors are less than one. II. Future value interest factors are less than one. III. Present value interest factors are greater than future value interest factors. IV. Present value interest factors grow as t grows, provided r is held constant. Select one: O a. II and Ill only Ob. II and IV only O c. I and III only O d. I only Oe. I and IV only
Q (a) A put and a call have the same maturity and strike price. If they have the same price, which one is in the money? Prove your answer and provide an intuitive explanation. (b) You find a put and a call with the same exercise price and maturity. What do you know about the relative prices of the put and call? Prove your answer and provide an intuitive explanation. Please explain step by step. I have seen other answers but still very confused.
When interest rates increase, with all else remaining the same, which of the following is true? Hint: Think about cashflow and timing of exercise. You can also utilize the put-call parity expression. Both calls and puts decrease in value Calls increase in value while puts decrease in value Both calls and puts increase in value O Puts increase in value while calls decrease in value

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