
Concept explainers
a)
To discuss: How the provided factor has an effect on the value of the common stock of the company. Provided factor: How the rise in the rate of interest, cause the investors to necessitate a greater return on the securities
b)
To discuss: How the provided factor has an effect on the value of the common stock of the company. Provided factor: Up surging of the overseas competition decreases the firm’s potential future growth on their earnings and dividends
c)
To discuss: How the provided factor has an effect on the value of the common stock of the company. Provided factor: The revaluation made by the investors rise their valuation of risk of the common stock of the company and as an outcome there was an up surge in the Country SA’s investments by the firm

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Chapter 7 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
- Chee Chew's portfolio has a beta of 1.27 and earned a return of 13.6% during the year just ended. The risk-free rate is currently 4.6%. The return on the market portfolio during the year just ended was 10.5%. a. Calculate Jensen's measure (Jensen's alpha) for Chee's portfolio for the year just ended. b. Compare the performance of Chee's portfolio found in part a to that of Carri Uhl's portfolio, which has a Jensen's measure of -0.25. Which portfolio performed better? Explain. c. Use your findings in part a to discuss the performance of Chee's portfolio during the period just ended.arrow_forwardDuring the year just ended, Anna Schultz's portfolio, which has a beta of 0.91, earned a return of 8.1%. The risk-free rate is currently 4.1%, and the return on the market portfolio during the year just ended was 9.4%. a. Calculate Treynor's measure for Anna's portfolio for the year just ended. b. Compare the performance of Anna's portfolio found in part a to that of Stacey Quant's portfolio, which has a Treynor's measure of 1.39%. Which portfolio performed better? Explain. c. Calculate Treynor's measure for the market portfolio for the year just ended. d. Use your findings in parts a and c to discuss the performance of Anna's portfolio relative to the market during the year just ended.arrow_forwardNeed answer.arrow_forward
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