Fin 320 Week 5

The book I use for study: Principles of Managerial Finance [Global Edition] 16th Edition. Chad J. Zutter & Scott B. Smart Questions in image

Question 5 a) How do financial institutions help individuals to diversify their portfolio risks? Which financial institution is best able to achieve this goal? b) Suppose the real risk-free rate in 2022 was 3.50% and inflation for the year was 3.0 %. If investors had expected the same inflation rate as that actually realised, what was the exact nominal interest rate? c) Please define the risk-adjusted return on capital (RAROC).

Question content area top Part 1 ​(Capital asset pricing​ model)  ​Anita, Inc. is considering the following investments. The current rate on Treasury bills is 7 ​percent, and the expected return for the market is 12.5 percent. Using the​ CAPM, what rates of return should Anita require for each individual​ security?   Stock Beta H 0.71 T 1.62 P 0.89 W 1.37 ​(Click on the icon    in order to copy its contents into a spreadsheet.​)       Question content area bottom Part 1 a.  The expected rate of return for security​ H, which has a beta of 0.71​, is enter your response here​%. ​(Round to two decimal​ places.) Part 2 b.  The expected rate of return for security​ T, which has a beta of 1.62​, is enter your response here​%. ​(Round to two decimal​ places.) Part 3 c.  The expected rate of return for security​ P, which has a beta of 0.89​, is enter your response here​%. ​(Round to two decimal​ places.) Part 4 d. The expected rate of return for…

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LG 3 P8-14 Portfolio analysis You have been given the expected return data shown in the first table on three assets-F, G, and H-over the period 2016-2019. Expected return Year Asset F Asset G Asset H 2016 16% 17% 14% 2017 2018 2019 19 781 16 15 14 631 15 16 17 Using these assets, you have isolated the three investment alternatives shown in the following table. Alternative Investment 1 100% of asset F 2 50% of asset F and 50% of asset G 3 50% of asset F and 50% of asset H a. Calculate the expected return over the 4-year period for each of the three alternatives. b. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives. c. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives. d. On the basis of your findings, which of the three investment alternatives do you recommend? Why?

Question 3 You are the treasurer of a mid-cap company and you are analyzing two equity opportunities as potential investments for your working capital of US$100 million. You are given the following information and can only choose one investment. Investment A (cash flows in US$millions) Year Cashflow Year Cashflow 0 Investment B (cash flows in US$millions) Market Return -100 Market Variance 0 1 -100 54 1 67 11% 24% 2 28 76 31 2 89 3 98 3 You are also given the following information to aid with your investment decision: Risk Free Rate 3.50% 98 Investment A (COV/Market) Investment B (COV/Market) Discuss and evaluate whether to pick Investment A or Investment B. 4 121 4 176

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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%

Question One   Njenge Bank has the following balance sheet (in millions) with the risk weights in parentheses.                  Assets                                                                 Liabilities and Equity          Cash                                                K20            Deposits                                     K175          OECD Interbank deposits              K25            Subordinated debt (2.5 years)                        K3          Mortgage loans                               K70            Cumulative preferred stock           K5          Consumer loans                               K70            Equity                                            K2             Total Assets                               K185                  Total Liabilities & Equity    K185            In addition, the bank has K30 million in performance-related standby letters of credit (SLCs), and K300 million in six-year interest rate swaps. Credit conversion factors…

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help  please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working!

Question 2 Kamet is an investment fund that invests on the Ghana Stock Exchange. In recent times the economy has gone through four different cycles which analyst believe may be repeated in the years ahead. Kamet is reviewing its investment strategy and is looking for the best way to make good returns for its clients. The returns on three assets selected by Kamet are provided below: Business Cycle Normal Boom Near Recession Recession You are required to: Probability 0.30 0.40 0.10 ???? Unilever 40% 20% 20% 12% Starwin 40% 45% 30% 50% Anglogold 30% 40% 15% 30% i. Compute the expected return and risk of each asset and advise Kamet as to which asset to invest more funds in on the basis of: a) expected return on the assets b) riskiness of the assets (Hint: compute the coefficient of variation of each asset and select the asset with the lowest coefficient of variation; CV=. 8 E(R)

1 views You have the following initial information on CMR Co. on which to base your calculations and discussion for questions 1) and 2):• Current long-term and target debt-equity ratio = 1:4• Corporate tax rate = 30%• Expected Inflation = 1.75%• Equity beta  = 1.6385• Debt beta = 0.2055• Expected market premium (rM – rF) = 6.00%• Risk-free rate (rF) = 2.15% 1) The CEO of CMR Co., for which you are CFO, has requested that you evaluate a potential investment in a new project. The proposed project requires an initial outlay of $7.15 billion. Once completed (1 year from initial outlay) it will provide a real net cash flow of $575 million in perpetuity following its completion. It has the same business risk as CMR Co.’s existing activities and will be funded using the firm’s current target D:E ratio. a) What is the nominal weighted-average cost of capital (WACC) for this project?b) As CFO, do you recommend investment in this project? Justify your answer (numerically). 2) Assume now a…

4. Measuring standalone risk using realized data Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Five years of realized returns for Celestial Crane Cosmetics Inc. (Crane Cosmetics) are given in the following table: Stock return Also note that: 2016 2017 2018 2019 23.75% 16.15% 28.50% 39.90% 2020 12.35% 1. While Crane Cosmetics was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on Crane Cosmetics's equity are calculated as arithmetic returns. Given this return data, the average realized return on Celestial Crane Cosmetics Inc.'s stock is 24.13% The preceding data series represents a sample of Crane Cosmetics's historical returns. Based on this conclusion, the standard deviation of Crane Cosmetics's historical returns is 14.6397% ▼ If investors expect…

Problem 13-19 Performance Metrics (LO1, CFA5) You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97. Year 2018 2019 2020 2021 2022 Fund -15.88 25.1 13.1 7.6 -1.62 Sharpe ratio Treynor ratio Market -31.58 20.2 11.5 8.0 -3.2 Risk-Free 38 5 2 5 What are the Sharpe and Treynor ratios for the fund? Note: Do not round intermediate calculations. Round your answers to 4 decimal places.