QSO 510 2-2 Scenario Analysis Stock Options Template

The table below shows information about the performance of stocks A and B last year.   Return Standard Deviation Stock A 15 % 8.3% Stock B 14% 2.1%   What reasons will you convey to your client to justify your decision in recommending this stock? How will this recommendation impact the client?

The table below shows information about the performance of stocks A and B last year.   Return Standard Deviation Stock A 15 % 8.3% Stock B 14% 2.1% As a financial advisor, are there factors other than return and risk that should be considered in making this decision? Based on these factors, what stock would you recommend to the client?

The return of stock B is __% The volatility of stock A is __% The volatility of stock B is __%

Problem 2-12 (Algo) Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. Stock Po A B P1 01 P2 02 00 140 145 145 145 145 145 135 290 130 290 130 290 270 290 280 290 145 580 C Required: Calculate the first-period rates of return on the following indexes of the three stocks (t = 0 to t = 1): Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. A market-value-weighted index. b. An equally weighted index. a. Rate of return b. Rate of return % %

Analyze the given table and answer the following questions.

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Please explain the price movements of each stock's DIS AND WFC from the past three months shown in the spreadsheet. Demonstrate a clear understanding of the concept beta of each stock.

Use the data table to answer the question that follows.   Stock A Stock B Stock C 52W high; 52W low $87.54; $32.21 $9.68; $6.25 $37.11; $35.92 Div 0 $0.05 $0.75 P/E 36 20 7.9 Close $85.43 $6.98 $36.87 An investor's primary concern with adding a new stock to their portfolio is value for the price paid. Which stock should they choose and why?    Stock B, because lower-priced stocks are more likely to be good deals in the financial market  Stock B, because its P/E ratio means that it is earning more per share than its price  Stock C, because its relatively lower P/E ratio indicates the others may be overvalued  Stock C, because its relatively higher Div value means it is the best overall deal

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Consider 2 stocks in the following table. We create a stock index of companies that make stuff for Spring Break. stocks QO ABC, Inc. 500 XYZ, Inc. 600 What is the initial portfolio weight for stock ABC in a market value-weighted index of these two stocks (in percent to 2 decimal places, so 10% is 10.00, not 0.10)? PO $140 $260 P1 Q1 $181 500 $230 600

Part A: True or False (20%) Please conclude weather the following statement are true or false and give me your reasons (You can explain by using knowledges learned from the class or textbooks or any other empirical facts in the financial market. Don't use your personal examples which is not representative enough.). 1. The true Market Portfolio is represented by the Standard & Poor's 500 Stock Index so it is perfectly correlated with the Standard & Poor's 500 Stock Index. 2 Since we know CAPM does not hold in the real financial market, it is useless to investors. 3. Investors usually prefer purchasing in-the-money options since in-the-money options are much cheaper than out-of-money options. 4. In a bankruptcy, bond investors have priority over shareholders in claims on the company's asset so bond holders are less vulnerable. However, buying corporate bonds is not a kind of riskless investment.

You have the following information:   Stock Shares Outstanding BOY Price EOY Price L 3,000 $ 15 $ 28 K 57,000 $ 31 $ 35     You want the beginning price-weighted index of these two stocks to be 500. Given this, what is the ending index value? Multiple Choice   A. 408.33 B. 487.08 C. 511.19 D. 576.09 E. 612.24

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Suppose a market consists of four stocks. The number of shares outstanding for each stock as well as the stock prices in two consecutive days are as follows: Stock A Stock B Stock C Stock D Shares outstanding 200 1000 400 3000 I $5 $30 $100 $40 Ро $15 $25 $80 $50 a) Compute the percentage increase in the price-weighted index for this market. b) Compute the percentage increase in the value-weighted index for this market. P₁

Mary, a finance student at Amity student, holds a portfolio which consists three stocks (one each) of: stock A, stock B, and stock C. Please note the following information about these stocks: Price Return Stock A Stock B $120 20% Standard deviation 0.35 Correlation between A and B Correlation between B and C a- Questions: $84 15% 0.1 0.3 Correlation between A and C 0.4 0.2 Stock C $96 10% 0.5 Please calculate the portfolio's expected return b- and standard deviation Please calculate the portfolio's variance

You've collected the following information from your favorite financial website. (The number next to the stock name is DO.) 52-Week Price Div Yld % PE Close Net Hi Stock (Div) Palm Coal 0.36 Lake Lead Grp 1.54 SIR 2.55 Ratio Price Chg -0.24 Lo 77.40 10.43 2.6 6. 13.90 55.81 33.42 3.8 10 40.43 -0.01 131.04 50.24 70.05 2.9 5.2 10 89.08 3.07 13.95 DR Dime 0.8O 6. 15.43 -0.26 Candy Galore 0.32 35.00 20.74 1.5 28 ?? 0.18 According to your research, the growth rate in dividends for SIR for the next five years is expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent indefinitely. Assume Investors require a return of 14 percent on SIR stock. According to your research, the growth rate in dividends for SIIR for the next five years is expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent…

Donald Gilmore has $100,000 invested in a 2-stock portfolio. $52,500 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer.   a. 1.00     b. 1.03     c. 1.06     d. 1.09     e. 1.12

You've collected the following information from your favorite financial website. 52-Week Price Lo Stock (Div) 10.43 Palm Coal .36 34.07 Lake Lead Grp 2.19 69.50 SIR 2.00 13.95 DR Dime .80 20.74 Candy Galore .32 Hi 77.40 56.46 130.93 50.24 35.00 % Div Yld % PE Ratio 2.6 6 5.3 2.2 % 5.2 1.5 10 10 6 28 Close Price 13.90 41.08 88.97 15.43 ?? Find the quote for the Lake Lead Group. Assume that the dividend is constant. What was the highest dividend yield over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Highest dividend yield What was the lowest dividend yield over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Lowest dividend yield Net Chg -.24 -.01 3.07 -.26 .18

Nikul

File Preview Problem 3: Stock Valuation (30 points) You work as a security analyst for a large investment firm. The portfolio manager has asked you whether it is a good idea to buy "ABC" stocks. The current stock price for "ABC" is $345 and the firm has just paid a $14 dividend. You have decided that the dividend discount model is appropriate for your valuation of ABC's stock. After carefully analyzing the firm and all relevant data, your best forecast is that the firm's dividends are expected to remain constant for the next five years. After that, dividends are expected to grow at 15% for 10 years. Following that, the growth is expected to be 3% forever. Assume that the required rate of return is 10%. A) What is the (theoretical) stock value based on the dividend discount model? B) Would you recommend buying the stock? Explain Hint: There are many ways to solve the problem. The simplest approach is to split it into two parts, find the value of each part, and then add the values…

You are given the following information regarding prices for a sample of stocks. PRICE PER SHARE Stock Number of Shares Jan December Honda 20 000 170 200 Nissan 40 000 130 155 Toyota 90 000 138 145 i.) Construct a price-weighted index for these three stocks for January and December ii.) Construct a value weighted index for the securities above for January and December iii) Construct an equal-weighted index by assuming $1,000 is invested in each stock. What is the percentage change in wealth for this portfolio?

The historical returns data for the past three years for Company A's stock is -6.0%, 15%, 15% and that of the market portfolio is 10%, 10% and 16%. According to the security market line (SML), the Stock A is:A. Over priced B. Under priced C. Correctly pricedD. Need more information

Problem 9-20 Portfolio Return (LG9-7) The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. Company US Bank PepsiCo JDS Uniphase Duke Energy Shares 400 300 700 300 Portfolio Return Dollar return Percentage return Beginning of Year Price $ 45.40 60.98 20.78 28.40 Dividend Per Share $ 2.25 1.54 % 1.45 What is your portfolio dollar return and percentage return? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. End of Year Price $ 45.33 64.45 18.56 34.16

You’ve collected the following information from your favorite financial website. 52-Week Price Stock (Div)Div Yld %PE Ratio Close PriceNet ChgHiLo77.40       10.43         Palm Coal 0.362.6      6       13.90    –0.24    55.81       33.42         Lake Lead Grp 1.543.8      10       40.43    –0.01    131.08       70.25         SIR 2.753.1      10       89.12    3.07    50.24       13.95         DR Dime 0.805.2      6       15.43    –0.26    35.00       20.74         Candy Galore 0.321.5      28       ??      0.18      According to your research, the growth rate in dividends for SIR for the next five years is expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent indefinitely. Assume investors require a return of 15 percent on SIR stock. Requirement 1:According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations. Round your…

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1 S Book What are the portfolio weights for a portfolio that has 120 shares of Stock A that sell for $30 per share and 100 shares of Stock B that sell for $20 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.) Stock A Stock B