Test 1 Cheat Sheet

Asset M Asset N j P?? Return, ??   P?? Return, ??   1   0.25   10%     0.15   10% 2 0.25 -6%   0.30 8% 3 0.15 2%   0.20 15% 4 0.20 5%   0.05 0% 5 0.15 20%   0.30 -2% Calculate the expected value of return, ?̅, for each of the two assets. Which provides the largest expected return? Calculate the standard deviation, ?? , for each of the two assets’ returns. Which appears to have the greatest risk? Calculate the portfolio expected return if you invest 27% of your wealth in M and 73% inN, of your total wealth of $40,000.

Consider 1-factor model and assume that the price of a certain fixed income security P(y) for y=9%, 9.05% and 8.95% is given by P(0.09)=$5,000; P(0.0905)=$4,980; P(0.0895)=$5,030. Find the estimate for DV01, Duration, and Convexity of this security. Keep at least 4 decimal digits while performing your calculations.

Please calculate CAPM of Asset J with the following information: where, kj = required return on asset j, Rf = risk-free rate of return, (6%) bj = beta coefficient for asset j, (1.75) %3D Rm = market return. (10%) The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] kj = Solve for required return on asset j (kj is CAPM) Please be detailed when answering and show all work, thank you.

If Po is the initial price of the security, P₁ is the price after you hold it for a year, and X represents a direct payment, an asset's rate of return is equal to: rate of return = (P₁ - Po) rate of return = (P₁ - Po) + X rate of return = (P₁-Po) / Po + XPo rate of return = (P₁ - Po)/Po + X

If the risk-free rate is 4.8 percent and the risk premium is 6.8 percent, what is the required return? (Round your answer to 1 decimal place.) Required Return: ___.__%

1. Given an American call option and knowing that S(0) = 19$, X = 20$, r = 10%, T- 5 months, CE = 1.50$, find the interval in which PA can be. =

How many internal rate of return IRRs (the maximum) are suggested by Descartes' rule of signs? 7,000 8,000 2,000 Oa. 1 Ob. 2 c. 3 O d. 4 O e. 5 3,000 4,000 4,000 5,000 4,000 6,000 1,000

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K Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk free rate, Re 2% The required return for the asset is (Round to two decimal places) Market return, f 8% CONTE Beta, b 0.2

Berdasarkan informasi tersebut a. Expected return Asset A b. Standard Deviation Asset A dan Asset B c. Portfolio AB Expected Return. d. Coefficient Correlation AB e. Portofolio AB Standard Deviation Please explain by Microsoft excel

Please give me answer very fast in 5 min sau

What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (SDi), covariance (COVij), and asset weight (Wi) are as shown below? Asset (A) E(R₂) = 25% SDA = 18% WA = 0.75 COVA, B = -0.0009 Select one: A. 13.65% B. 20 U ODN 20.0% C. 18.64% D. 22.5% Asset (B) E(R₂) = 15% SDB = 11% WB = 0.25

Risk-free rate is 7% 2. Calculate the required rate of return for A. 1. 8.90% 2. 8.40% 3. 8.70% 4. 8.30%

Use the following table to calculate the expected return from the asset. Return Probability 0.1      0.25     0.2      0.5     0.25      0.25       20.00% 18.75% 17.50% 15.00%

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Example of CAPM Equation: Case Risk free Rate (Rf) Market return (Km) Beta (b)  Required Return A 5% 8% 1.30 ? B 8% 13% 0.90 ? C 10% 15% -0.20% ? D ? 12% 1.0 12% E 6% ? 0.60 9% F 5% 16% ? 10% Required: Using CAPM equation, compute the missing value (?)

4. Suppose that we can describe the world using two states and that two assets are available, asset K and asset L. We assume the assets' future prices have the following distributions:

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FOLLOW THE FORMULAS GIVEN ABOVEDOWNVOTE IF YOU DONT FOLLOW THE FORMULAS

Suppose two asset returns are described by a 1-factor model = 2% + 0.6f + ej r2= 2% + 0.6f+ e2 where the volatility of fis 30% and the volatility of e and ez is 20%. What is the covariance of r and r2? (Nearest 0.0001)

The lowest rate of return possible is:a. 0%b. -∞c. -100%d. the company’s MARR

State ofEconomy Probabilityof State Return on AssetDin State Return on AssetEin State Return on AssetFin State Boom 0.35 0.060 0.310 0.25 Normal 0.50 0.060 0.180 0.20 Recession 0.15 0.060 -0.210 0.10 A. Calculate the expected return (mean) for each security.

Betas Answer the questions beiow for assets A to D shown in the following table. Asset Beta so B 1.60 - 20 D .90 a. What impact would a 10% increase in the market return be expected to have on each asser's return? b. What impact would a 10% decrease in the market return be expected to have on each asser's return? c. If you were certain that the market retum would increase in the near future, which asset would you prefer? Why? d. If you were certain that the market return would decrease in the near future, which asset would you prefer? Why?

Qu. 5 please help and show all steps with formulas used

1. If you perform a NPV analysis on a perspective investment using a "d" = 15% and:       a. the NPV Is < 0, what can you tell me about the investment's IRR (time adjusted rate of return)?       b. the NPV is > 0, what can you tell me about the investment's IRR (time adjusted rate of return)?        c. the NPV is= 0, what can you tell me about the investment's IRR (time adjusted rate of return)?          2. We presume in Investment analysis that the payback method of evaluation is a better measure of.................than it is a measure of...................... We also think less of the payback method because it sometimes ignores the............., ..................of an investment since the................. the oftentimes occurs after the payback period has lapsed.        3. Please explain why we oftentimes equate EBITDA (earnings before subtracting] interest, taxes, depreciation & amortization) with NOI (net operating income) in examining business' profitability. Why don't…

n is the number of periods of an investment, PV is the starting value, FVn is the future value n periods ahead, and ^ means 'to the power of'. What is the correct formula for calculating return? a)(PV/FVn)^n - 1 b)(FVn/PV)^n c)1 - (FVn/PV)^n d)(FVn/PV)^n - 1

PLEASE ANSWER IN EXCEL FORMAT - A= ( B+ * )

Assume that there are two factors that price assets. Risk free rate is 4%. Factor 1 has anexpected return of 8% and factor 2 has an expected return of 10%. Calculate the expectedreturn for each asset with the following sensitivities using the Arbitrage Pricing Theory (APT). (a) β1 = 1.2, β2 = 0.9;  (b) β1 = 1.5, β2 = −0.60;

Q11. n is the number of periods of an investment, PV is the starting value, FVn is the future value n periods ahead, and ^ means 'to the power of'. What is the correct formula for calculating return? Group of answer choices 1. (FVn/PV)^n - 1 2. (FVn/PV)^n 3. (PV/FVn)^n - 1 4. 1 - (FVn/PV)^n

What is the expected market return if the expected return on asset A is 19% and the risk free rate is 5%? Asset A has a beta of 1.4. Assume that the CAPM is correct. a. 5% b. 9% c. 13% d. 15% e. 19%