CFIN (with Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
CFIN (with Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
5th Edition
ISBN: 9781305661653
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for …
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Chapter 8, Problem 2PROB
Summary Introduction

Expected rate of return is the anticipated profit or loss of an investment to be received by the investor. It is computed by expecting the probabilities of a maximum range of returns on an investment.

Standard deviation is the financial measure of risk and stability on the investment returns.

Coefficient of variance is a measure used to calculate the total risk per unit of return of an investment.

CFIN (with Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press), Chapter 8, Problem 2PROB

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Jeff Krause purchased 1,000 shares of a speculative stock in January for $1.89 per share. Six months later, he sold them for $9.95 per share. He uses an online broker that charges him $10.00 per trade. What was Jeff's annualized HPR on this investment? Jeff's annualized HPR on this investment is %. (Round to the nearest whole percent.)
Congratulations! Your portfolio returned 16.7% last year, 2.5% better than the market return of 14.2%. Your portfolio had a standard deviation of earnings equal to 18%, and the risk-free rate is equal to 4.4%. Calculate Sharpe's measure for your portfolio. If the market's Sharpe's measure is 0.29, did you do better or worse than the market from a risk/return perspective? The Sharpe's measure of your portfolio is (Round to two decimal places.)
On January 1, 2020, Simon Love's portfolio of 15 common stocks had a market value of $258,000. At the end of May 2020, Simon sold one of the stocks, which had a beginning-of-year value of $26,900, for $31,400. He did not reinvest those or any other funds in the portfolio during the year. He received total dividends from stocks in his portfolio of $11,900 during the year. On December 31, 2020, Simon's portfolio had a market value of $246,000. Find the HPR on Simon's portfolio during the year ended December 31, 2020. (Measure the amount of withdrawn funds at their beginning-of-year value.) Simon's portfolio HPR during the year ended December 31, 2020, is %. (Round to two decimal places.)

Chapter 8 Solutions

CFIN (with Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

Ch. 8 - Prob. 1PROBCh. 8 - Prob. 2PROBCh. 8 - Prob. 3PROBCh. 8 - Prob. 4PROBCh. 8 - Prob. 5PROBCh. 8 - Prob. 6PROBCh. 8 - Prob. 7PROBCh. 8 - Prob. 8PROBCh. 8 - Prob. 9PROBCh. 8 - Prob. 10PROB
Ch. 8 - Prob. 11PROBCh. 8 - Prob. 12PROBCh. 8 - Prob. 13PROBCh. 8 - Prob. 14PROBCh. 8 - Prob. 15PROBCh. 8 - Prob. 16PROBCh. 8 - Prob. 17PROBCh. 8 - Prob. 18PROBCh. 8 - Prob. 19PROBCh. 8 - Prob. 20PROB
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Portfolio return, variance, standard deviation; Author: MyFinanceTeacher;https://www.youtube.com/watch?v=RWT0kx36vZE;License: Standard YouTube License, CC-BY