
a)
To discuss:
Average return of different portfolio alternatives.
Introduction:
Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.
b)
To discuss:
Standard deviation.
Introduction:
Return: In financial context, return is seen as percentage that represents the profit in an investment.
Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.
Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.
The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.
c)
To discuss:
Coefficient of variation.
Introduction:
The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.
d)
To discuss:
Performance of portfolio.

Trending nowThis is a popular solution!

Chapter 8 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
- The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $700 for 5 years and $350 for the sixth year. Its current book value is $3,850, and it can be sold on an Internet auction site for $4,440 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life. Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $12,300, and has an estimated useful life of 6 years with an estimated salvage value of $1,200. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine's much greater efficiency would reduce operating expenses by $1,800 per year. To support the…arrow_forwardSt. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. A new welder will cost $181,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $28,000 to $78,500 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 25%, and the project cost of capital is 13%. What is the NPV if the firm replaces the old welder with the new one? Do not round intermediate calculations. Round your answer to the nearest dollar. Negative value, if any, should be indicated by a minus sign.arrow_forwardEnds Apr 27 Explain why we start with Sales forecasts when we do our financial forecasting. What are the limitations of the Percent of Sales Forecasting method?arrow_forward
- Describe in detail what exactly is the Cash Conversion Cycle, how is it computed and what is the purpose of this calculation (how is it used).arrow_forwardExplain what Interest Rate Parity is, how it is calculated, and why it is important to a company operating internationally.arrow_forwardCompare and contrast the three core means of adding shareholder wealth; Cash Dividends, Stock Dividends and Stock Splits, and Stock Repurchases. Include the various advantages and disadvantages of each one.arrow_forward
- Calculate the future value of a lump sum of $1,000 invested for 4 years at 10%, using compounded quarterly.arrow_forwardIf value is not clear then please comment i will write values dont solve question, i will give unhelpful.arrow_forwardwhat are some of the question can i asek my prinsiple of finance teache?arrow_forward