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You are an employee at XYZ Bank. Your Bank is trying the construct an investment portfolio that matches its resources and goals. To do so, you and your team are required to evaluate the investment options available for your Bank and decide what is the best option to choose. A B C D E Value of the 1,400,500 1,370,050 750,000 450,300 1,700,650 position Duration 5 4 6 YTM 4% 3% 7% 8% 5.50% Potential adverse move 0.30% 0.26% 0.43% 0.56% 0.37% in yield Correlation A. В D E A 1. 0.5 0.3 0.1 -0.2 B 1 0.2 -0.3 0.4 1 0.2 -0.3 D 1. -0.4 E Weight А В D E Scenario I 30.00% 10.00% 60.00% Scenario II 50.00% 30.00% 20.00% Scenario III 50.00% 50.00%

Subject name: Principles of Insurance and Risk Management, Answer it fast please.

You are an employee at XYZ Bank.  Your Bank is trying the construct an investment portfolio that matches its resources and goals. To do so, you and your team are required to evaluate the investment options available for your Bank and decide what is the best option to choose.                                      A B C D E                       Value of the position  1,400,500 1,370,050 750,000 450,300 1,700,650                       Duration  5 3 5 4 6                       YTM 4% 3% 7% 8% 5.50%                       Potential adverse move in yield 0.30% 0.26% 0.43% 0.56% 0.37%                                                         Correlation  A B C D E                       A 1 0.5 0.3 0.1 -0.2                       B   1 0.2 -0.3 0.4                       C     1 0.2 -0.3                       D       1 -0.4                       E         1                                                         Weight A B C D E                       Scenario I…

Assume that you were given $100,000 to invest in financial assets, discuss the following: Explain what your investment portfolio would look like. Share what you believe is your risk tolerance

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topic: probability and decision making Youre given two investment options: Option A: You invest everything in Posh Spice. You have a 7%chance to earn 90% of your investment, a 10% chance of losing10% of it, and an 83% chance that you will neither win nor lose. Option B: You invest everything in Trust Bank. You’re sure to get7% interest, and there’s no risk of losing money. Which will you go for?

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Suppose you consider investing some of your wealth in one of three investment portfolios. Your financial adviser provides you with the following table, which gives the probabilities of possible returns from each: Gold   Food   Automobile   Probability Return Probability Return Probability Return 0.2 15% 0.4 15% 0.2 20% 0.3 8.3% 0.6 5% 0.25 12% 0.2 10%     0.25 6% 0.3 5%     0.2 5%           0.10% Which investment should you choose to maximize your expected return: gold, food, or automobile?  If you are risk-averse and have to choose between the gold and the food investments, which should you choose? Why? Explain briefly.

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Suppose you are considering investing some of your wealth in one of three investment portfolios: gold, food, or auto. Your broker provides you with the following table, which gives the probabilities of possible returns from each investment:   Gold Food Auto Probability Return Probability Return Probability Return 0.2 15% 0.4 15% 0.2 20% 0.3 8.3% 0.6 5% 0.25 12% 0.2 10%     0.25 6% 0.3 5%     0.2 5%         0.1 0.10% Which investment should you choose to maximize your expected return: gold, food, or auto? If you are risk-averse and have to choose between the gold and the food investments, which should you choose? Why? Do I have to use standard deviation? Why?

4. Risk aversion Suppose an investor, Erik, is offered the investment opportunities described in the table below. Each investment costs $1,000 today and provides a payoff, also described below, one year from now. Option Payoff One Year from Now 1 100% chance of receiving $1,100 2. 50% chance of receiving $1,000 50% chance of receiving $1,200 3 50% chance of receiving $200 50% chance of receiving $2,000 If Erik is risk averse, which investment will he prefer? O The investor will choose option 1. O The investor will choose option 2. O The investor will choose option 3. O The investor will be indifferent toward these options. In contrast to his brother Erik, Devin is a risk lover (or exhibits risk seeking behavior). Which of the following statements is true about Devin? O Everything else remaining constant, Devin will prefer option 3. O Everything else remaining constant, Devin will prefer option 2. O Everything else remaining constant, Devin will prefer option 1. O None of these options…

Please Answer Question 3 full workout. NO SPREAD SHEET Q1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nine line items.       Q2 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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Question 1) Federico wants to calculate the expected rate of return for security for his work as a freelance investment banker. He has the following figures to calculate CAPM: the risk-free interest rate is 4%, the expected return of the market is 17%, and the risk index of the security is 1.40.

QUESTION 4 Below are three different investment alternatives, along with information on their expected return and return standard deviation. Suppose investors have the following utility function: U = E(R) - 12 Ao² The coefficient of risk aversion (A) for Alice is 1.5, and that for John is 2.5. Which investment will each investor pick? (hint: Find the investment giving the investor the highest utility level). Investment Expected Return E[r] Standard Deviation o 0.10 0.02 0.25 0.05 0.30 0.15 0.35 0.40 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 2 3

Being Finance Manager of Salalah Textiles Industries, you need to invest an amount for OMR 50,000 in the investment market. Assume the market rate of return is 0.11, risk free rate of return is 2.75% and Beta is .73, then:Required:a) What should be required rate of return for your investment?b) Keeping the answer of question # 2a in mind, if different investment options are available with different returns in the investment market, for example:i. For investment in Project-A, 6.30% return is offered;ii. For investment in Project-B, 10.95% return is offered, andiii. For investment in Project-C, 5.65% return is offered.In above scenario, explain whether any why these investment options are overvalued or undervalued? Keeping the answer of question # 2a and 2b, what will be your investment decision (justify your answer with reasons)

Answers: a)A b)B c)C d)D e)E

Risk aversion Erik is an investor with $5,000 available for investment. He has the following three investment possibilities from which to choose: Option Scenarios 1 Keep the $5,000 in cash for one year. 2 Invest in a friend’s business with a   50% chance of getting $10,000 after one year and a   50% chance of getting nothing. 3 Invest in a relative’s business with a   30% chance of getting $15,000 after one year,   20% chance of getting $2,500 after one year,   50% chance of getting nothing.    If Erik is indifferent about these three investment options, and he thinks that they are worth the same to him. Therefore, which of the following statements is true about Erik? He is risk-neutral.   He is risk-averse.   He is risk-loving.   None of these descriptions is accurate.     Later, while examining the same investment alternatives, Erik’s brother, Devin, clearly expressed a preference for option 1. Which of the following…

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Suppose an investor is concerned about a business choice in which there are three projects, the probability and returns are given below. Probability Return   0.4 $100   0.4 40   0.2 -30     The expected value of the uncertain investment is $ ----------- (round off to the nearest dollar

Compute the expected rate of return of Miss Dimaano considering her security for her work as a freelance investment banker based on the following figures: Risk free rate = 4%; Expected return of the market = 12%; Systematic risk b of the security = 1.3.