Quiz 1
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Feb 20, 2024
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Alternative Investments - Quiz 1
Question 1
Marks: 1
When using the net income approach (NOI) in real estate valuation, if inflation is passed through, then the appraisal price will most likely:
Choose one answer.
a. increase.
b. remain unchanged.
c. decrease.
Question 2
Marks: 1
An analyst collects the following data:
Apartment Complex Under Consideration
Apartment Complex Recently Sold
Office Building Recently Sold
Net Operating Income (NOI)
$250,000
$91,000
$480,000
Sales price
$700,000
$3,000,000
Based on the data provided, the appraisal price of the apartment complex under consideration is closest
to:
Choose one answer.
a. $1,562,500.
b. $1,923,077.
c. $1,724,138.
Question 3
Marks: 1
Hedge funds that contain infrequently traded assets would most likely exhibit a downward bias with respect to:
Choose one answer.
a. correlations with conventional equity investments but not measured risk.
b. measured risk but not correlations with conventional equity investments.
c. both measured risk and correlations with conventional equity investments.
Question 4
Marks: 1
Venture capital investments used to provide capital for companies initiating commercial manufacturing and sales are most likely to be considered a form of:
Choose one answer.
a. first-stage financing.
b. second-stage financing.
c. seed-stage financing.
Question 5
Marks: 1
Which classification of hedge funds is least likely to use a short position in stock as a part of its strategy?
Choose one answer.
a. Market-neutral funds.
b. Distressed securities funds.
c. Emerging-market funds.
Question 6
Marks: 1
The infrequent trading of some assets that hedge funds invest in most likely results in hedge fund:
Choose one answer.
a. returns being understated.
b. correlations with other assets being overstated.
c. risk being understated.
Question 7
Marks: 1
Which of the following is the least accurate approach used to value closely held companies? Basing the value of company on the:
Choose one answer.
a. historic cost of the assets of similar companies.
b. present value of future economic income.
c. average market price of similar companies recently sold.
Question 8
Marks: 1
The primary motivation for investing in commodity-linked bonds is that they most likely provide:
Choose one answer.
a. Protection against interest rate risk.
b. Capital gains returns.
c. An income stream.
Question 9
Marks: 1
An analyst compared the performance of a hedge fund index with the performance of a major stock index over the past eight years. She noted that the hedge fund index (created from a database) had a higher average return, higher standard deviation, and higher Sharpe ratio than the stock index. All the successful funds that have been in the hedge fund database continued to accept new money over the eight-year period. What biases do the risk and return measures in the database most likely have? Average return:
Choose one answer.
a. is understated and standard deviation is overstated.
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Related Questions
Solving for Unknown Variables for Different Investments
Solve for the unknown variables in each of the four separate investment scenarios. Assume interest is compounded annually in each case.
Round final answer to the nearest whole number or percentage point.
Use a negative sign only for an amount related to PV.
Investment 1
Investment 2
Investment 3
Investment 4
RATE
Answer
7%
4%
6%
NPER
4
Answer
12
10
PV
$(14,500)
$(63,800)
Answer
$(237,800)
FV
$23,200
$101,500
$52,200
Answer
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b. If the BTIRR were partitioned based on BTCFo and BTCFs' what proportions of the BTIRR would be represented by each?
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Question 1
To compensate for differences in the time horizons among investment opportunities, investors use ________ return as their selection criterion.
A) real
B) expected
C) rate
D) average annual
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Evaluate the two alternatives A and B and decide the economic justified
alternative using:
Present worth method, Annual worth method, Future worth method
I.R.R method
E.R.R Method
, E.R.R.R method
M.A.R.R = 15%, the details of alternatives are shown in the table below
Alternatives
B
A
$6,000 $7,500
Investments
Useful life (years)
5
10
Annual disbursements
$2,500 $3,500
Annual revenues
$4,500 $6,000
Salvage values
$500 $1,000
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You have been given the following return data, on three assets-A, B, and C-over the period 2021-2024. Using these assets, you have isolated three
investment alternatives:
a. Calculate the average portfolio return for each of the three alternatives.
b. Calculate the standard deviation of returns for each of the three alternatives.
c. On the basis of your findings in parts a and b, which of the three investment alternatives would you recommend? Why?
OCTOB
a. Calculate the portfolio return over the 4-year period for each of the 3 alternatives.
Alternative 1: 7.00% (Round to two decimal places.)
Alternative 2: 7.00% (Round to two decimal places)
Alternative 3: 7.00% (Round to two decimal places.)
b. Calculate the standard deviation of returns over the 4-year period for each of the 3 alternatives.
Alternative 1: % (Round to three decimal places)
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Question content area top
Part 1
(Present
value of an uneven stream of
payments)
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
Investment
End of Year
A
B
C
1
$
3,000
$
2,000
$
5,000
2
4,000
2,000
5,000
3
5,000
2,000
(5,000)
4
(6,000)
2,000
(5,000)
5
6,000
4,000
15,000
(Click
on the icon
in order to copy its contents into a
spreadsheet.)
What is the present value of each of these three investments if the appropriate discount rate is
9
percent?
Question content area bottom
Part 1
a. What is the present value of investment A at an annual discount rate of
9
percent?
$enter your response here
(Round to the nearest cent.)
Part 2
b. What is the present value of investment B at an annual…
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The possible rates of return of two assets, A and B, under different economic conditions are given below:
Economic Situation Probability Return of Asset A Return of Asset B Recession 0.2 10% 6%
Stable 0.5 14% 15%
Growth 0.3 20% 11%
An investor places 50% of his funds in Asset A and 50% in Asset B. [Note: you may use correlation between A and B as 0.2401] Required:
(i)Calculate the risk and expected return for each asset.
(ii)Calculate the risk and expected return of the investor’s 2-assets portfolio.
(iii) What do you understand by total risk?
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Please correct answer and don't use hand rating
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Evaluate the two alternatives A and B and decide the economic justified
alternative using:
Present worth method
Future worth method
9
9
Annual worth method
E.R.R Method
I.R.R method
E.R.R.R method
9
M.A.R.R 15%, the details of alternatives are shown in the table below
Alternatives
A
B
Investments
$60,000 $75,000
Useful life (years)
5
10
Annual disbursements
$25,000 $35,000
Annual revenues
$45,000 $60,000
Salvage values
$5,000 $10,000
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es
The four people below have the following investments.
Invested
Amount
$ 11,800
14,800
21,800
17,800
Jerry
Elaine
George
Kramer
Req 1A
Interest
Rate
Required:
1-a. Calculate the future value at the end of three years. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
1-b. Who has the greatest investment accumulation?
Req 1B
Jerry
Elaine
George
Kramer
12%
8
7
9
Complete this question by entering your answers in the tabs below.
Compounding
Quarterly
Semiannually
Future Value
Annually
Annually
Calculate the future value at the end of three years.
Note: Use Excel or a financial calculator. Round your answers to 2 decimal places.
2
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Question content area top
Part 1
(Related to Checkpoint 6.6)
(Present
value of annuities and complex cash
flows)
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
Investment Alternatives
End of Year
A
B
C
1
$
14,000
$
14,000
2
14,000
3
14,000
4
14,000
5
14,000
$
14,000
6
14,000
70,000
7
14,000
8
14,000
9
14,000
10
14,000
14,000
(Click
on the icon
in order to copy its contents into a
spreadsheet.)
Assuming an annual discount rate of
15
percent, find the present value of each investment.
Question content area bottom
Part 1
a. What is the present value of investment A at an annual discount rate of
15
percent?…
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QUESTION A10
A housing developer has short-listed three investment strategies for investment consideration.
The following shows the projected payoff (profit in $ million) according to the decision
alternatives and state of nature. Also given are the probabilities of state of nature.
Payoff (in $ million) table
State of Nature (Economy)
Recession Recovery Boom
Decision Alternative
Strategy A
Strategy B
Strategy C
Probability
5.5
3.2
-1.4
3.0
3.8
-1.1
-1.2
4.5
2.8
0.2
0.5
0.3
(a)
Calculate the expected value for each strategy.
(b)
State the best decision.
(c)
Explain briefly the meaning of state of nature ·
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Subject: accounting
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PLEASE ANSWER ALL THE QUESTIONS
Question 1
Fill the parts in the above table that are shaded in yellow. You will notice that there are nine line items.
Question 2
Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML)
b) Superimpose the CAPM’s required return on the SML
c) Indicate which investments will plot on, above and below the SML?
d) If an investment’s expected return (mean return) does not plot on the SML, what does it show? Identify undervalued/overvalued investments from the graph
Question 3
From the information generated in the previous two questions;
a) Identify two investment alternatives that can be combined in a portfolio. Assume a 50-50 investment allocation in each investment alternative.
b) Compute the expected return of the portfolio thus formed.
c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?
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Provide correct answer don't use ai
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Only typed answer
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Version Ai
Saved
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Save & Exit
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Suppose the returns on a particular asset are normally distributed. The asset had an average return of 10.9 percent and a standard
deviation of 22.6 percent. Use the NORMDIST function in Excel® to determine the probability that in any given year you will lose
money by investing in this asset.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Probability
%
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Course: FinanceAs a great investor, you are interested in 3 assets to invest: A, B and C. A financial advisor tells you that the returns on the assets are independent of each other, and you are given the following data:
Asset
A
B
C
E(Ri)
0.05
0.035
0.06
Variance
0.0015
0
0.008
You have not yet analyzed what your degree of risk aversion (A) is, but you know that your utility function behaves as follows: U[ E(Rp)] = E(Rp) - 0.5 * A * Variance. (See attached image for a better understanding)
You are asked to:(a) Find the optimal portfolio with these 3 assets {called wA, wB and wC}.b) Calculate the expected return and risk of the optimal portfolio for the following degrees of risk aversion (A):(i) A = 5(ii) A = 10(iii) A = 16
Please ASAP
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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?
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vvk.1
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Please do not give solution in image format thanku
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Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items.
Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph
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Please answer all questions
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Pls give me a correct answer
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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.
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Accounting question
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