Finance 419 Assignment for Week Two Individual Assignment.

2005 Words Jan 25th, 2011 9 Pages
Finance 419 assignment for week two individual assignment.

Assignments from the Readings FIN/419

Assignments from the Readings Ch. 5: P5–3, P5–4, P5–13 P5–3 Risk preferences Sharon Smith, the financial manager for Barnett Corporation, wishes to evaluate three prospective investments: X, Y, and Z. Currently, the firm
…show more content…
This implies that I prefer a lower risk on a higher return on my investments, which makes me risk-averse. d. Assume that expansion B’s most likely outcome is 21% per year and that all other facts remain the same. Does this change your answer to part c? Why? My answer to part c. would not change because the range of the rate of return is still in favor of Expansion A with the less risky rate of 8%. P5–13- Portfolio return and standard deviation Jamie Wong is considering building an investment portfolio containing two stocks, L and M. Stock L will represent 40% of the dollar value of the portfolio, and stock M will account for the other 60%. The expected returns over the next 6 years, 2010–2015, for each of these stocks are shown in the following table: Expected return Year Stock L Stock M 2010 14% 20% 2011 14 18 2012 16 16 2013 17 14 2014 17 12