Which of the following statements about the behaviour of the portfolio of shares during the 2010-2020 period is patently false?A. The Paasche indices exceed the Laspeyres indices, indicating that the weighted price and weighted quantity changes are positively correlated.B. In real terms, the increase in the value of the share portfolio was most probably between 61.53% and 80.46%.C. In the main, the individual investor bought more shares that appreciated in value and sold some shares that lost value during the 2010 - 2020period.D. The Laspeyres indices exceed the Paasche indices, indicating that the weighted price and weighted quantity changes are positively correlated.SECTION DBased on the information provided below, answer questions 17 to 21.A business researcher with a keen interest in micro, small and medium enterprises (MSMEs) is investigating the relationship between the averageannual sales and average annual earnings of 20 MSMEs in the Western Cape province described as the most resilient during the Covid-19pandemic' in a recent article. Table D, below, shows the data collected from the 20 MSMEs for the 2020-2022 period.Table D: Average annual sales and average annual earnings of 20 MDMEs in the Western Cape Province for the 2020-2022 period.#MSME 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20Averageannualsales, R89,2 19,3 18,2 71,7 58,7 46,8 17,5 11,9 20 51,2 28,9 69,2 32,4 62,3 25,4 39,6 78,3 81,2 55,9 41,1millionsAverageannualearnings, 11,4 4,5 1,3 8 6,6 5,1 2,6 1,7 3,5 8,2 4,4 12,8 3,4 7,3 4,6 5,5 10,3 10,5 7,6 5,2Rmillions

A portfolio of shares refers to a collection or combination of individual stocks or equities owned…

Answered: Which of the following statements about…

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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How did Enrons Management profited from the Fraud over the years and in the end
man.1
Some investors use the Sharpe ratio as a way of comparing the benefits of owning shares of stock in a company to the risks. The Sharpe ratio of a stock is defined as the ratio of the difference between the mean return on the stock and the mean return on government bonds (called the risk-free rate rf ) to the SD of the returns on the stock. The mean return on government bonds is rf = 0.03% per day. The table below describes the daily return of three stocks. Date APPLE. TESLA GM 01/10/20 0.85% 4.46% 2.67% 02/10/20 -3.23% - 7.38% 0.26% 05/10/20 3.08% 2.55% 1.64% 06/10/20 -2.87% -2.75% -1.81% 07/10/20 1.70% 2.73% 4.01% 08/10/20 -0.10% 0.15% 1.87% 09/10/20 1.74% 1.90% -0.16% 12/10/20 6.35% 1.91% 0.16% 13/10/20 -2.65% 0.98% -1.06% 14/10/20 0.07% 3.28% -0.63% 15/10/20 -0.40% -2.69% 2.90% 16/10/20 -1.40% -2.05%…
In a recent closely contested lawsuit, Apex sued Bpex for patent infringement. The jury came back today with its decision. The rate of return on Apex was rA = 3.1%. The rate of return on Bpex was only r3 = 2.5%. The market today responded to very encouraging news about the unemployment rate, and = 3%. The historical relationship between returns on these stocks and the market portfolio has been estimated from index model regressions as: Apex: ra Вpex: r B = -0.1% + 0.8rM a. What is the predicted returns for Apex & Bpex? (Do not round intermediate calculations. Round your answers to 1 decimal place.) Apex Bpex = 0.5% + 1.1rM Predicted Returns % % b. Which company do you think won the lawsuit? Apex O Bpex
27 - Which of the following statements is CORRECT? Suppose the returns on two stocks are negatively correlated. One has a beta of 1.2 as determined in a regression analysis using data for the last 5 years, while the other has a beta of −6. The returns on the stock with the negative beta must have been negatively correlated with returns on most other stocks during that 5-year period. Suppose you are managing a stock portfolio, and you have information that leads you to believe the stock market is likely to be very strong in the immediate future. That is, you are convinced that the market is about to rise sharply. You should sell your high-beta stocks and buy low-beta stocks in order to take advantage of the expected market move. You think that investor sentiment is about to change, and investors are about to become more risk averse. This suggests that you should re-balance your portfolio to include more high-beta stocks. If the market risk premium remains constant, but the…
12. Portfoliobeta and weights Musashi is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Atteric Inc. Arthur Inc. Li Corp. Baque Co. 0.91% Investment Allocation Beta 0.900 O 0.71% 35% 1.13% 20% 15% 30% Musashi calculated the portfolio's beta as 0.960 and the portfolio's expected return as 11.24%. 1.05% 1.500 1.300 0.500 Musashi thinks it will be a good idea to reallocate the funds in his client's portfolio. He recommends replacing Atteric Inc.'s shares with the same amount in additional shares of Baque Co. The risk-free rate is 5.00%, and the market risk premium is 6.50%. Standard Deviation According to Musashi's recommendation, assuming that the market is in equilibrium, how much will the portfolio's required return change? 0.53% 0.57% 0.60% 0.64%
H. As a new analyst, you have obtained the prices for the stocks of both Lulu and Lemon. Both stocks did not paid any dividends during the entire period. (1) (II) (III) Your manager has asked you (i) to compute the rate of return and standard deviation of the two stocks and suggest that because these companies produce similar products, you should continue your analysis by (ii) computing their covariance and correlation. Show all calculations. Year 2019 2020 2021 2022 2023 Closing prices of LuLu Closing prices of Lemon 20.50 30.10 19.92 28.50 22.45 30.10 24.50 40.30 20.50 36.40 Compute the return and standard deviation of a portfolio with 60% investment in Lulu and 40% in Lemon. Would you recommend putting these two stocks together in a portfolio? Explain why or why not.
The sensitivity of a mining company’s stock to unexpected changes in interest rates and GNP is measured by betas of 0.85 and 0.20. What is the expected rate of return on the company’s stock if market-wide expected rates of return for portfolios with no systematic risk and with sensitivity only to interest rates and GNP are 6.0%, 8.0%, and 11.0% respectively.
If you were an investor considering purchasing the stock of a company and you were concerned about the company's ability to produce income or operating success for a given period of time, which of the following trends would worry you most? O a decreasing inventory turnover ratio an increasing return on common stockholders' equity ratio O a decreasing return on assets ratio an increasing current ratio
Consider the performance of two securities, J and K over the five year period from 2000 to 2004. The annual return earned on each one of them is as provided in the table below: Year J K % % 2000 -30.0 6.4 2001 55.9 -21.1 2002 15.7 -10.0 2003 75.9 35.0 2004 5.7 15.6 Required: Compute the following: (i) The Arithmetic Mean returns of both securities over the 5-year holding period and the Geometric Mean return of both securities over the 5-year holding period. (ii) Assuming your organization had K100 million to invest on 01st January, 2000. If this was invested equally in the two securities, what terminal value would be accumulated after 5 years with annual compounding? (ii)What level of volatility would your investments be exposed to over the holding period for each security? and Evaluate the performance of the securities individually. With hindsight, which security would you have advised management to invest…
Which of the following is the best reason why the price-earnings method is often used by investors to estimate the fair price of a stock? a) Because the earning multiples are easily found in online financial databases. b) Earnings per share is a known amount that is related to the payment of future dividends. c) Because the price-earnings method gives the same answer as the constant growth method and is easier to compute. d) The price-earnings method has been shown to provide the most accurate price estimate.
Consider the following table for a period of six years: Year 123456 Large- Company Stocks - 16.09% -26.89 37.51 24.21 7.72 6.85 Returns U.S. Treasury Bills 7.57% 8.13 6.15 6.47 5.59 8.06

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