Please Don't USE EXCEL James Peterson has gathered the following information of 5 exchange-traded funds (ETFS). Theperformance data of the ETFS are presented in the following table.Annual risk Correlation with(STDEV)ETFPricePriceDividend12-month4/30/20204/30/2021paidtotal retumETF A$0$0A10044%32%+100%B1003%4%- 16%100$010%27%+65%D100$315%15%+76%100$110%17%+71% Which ETF is least risky?Which ETF is least correlated4.5.with ETF A?6.Calculate James' portfolio risk Portfolio return:and retum if he invests in ETFS A and D (Showing work is optional.)equally. (WA = Wo = 50%)Portfolio risk:(Showing work is optional.)Calculate James' portfolio risk Portfolio return:and return if he invests 50% in ETF A (Showing work is optional.)and 50% in a risk-free asset yielding Portfolio risk:7.0.25% during the same 12-monthinvestment period.(Showing work is optional.)

Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

4. Which ETF is least risky? 5. Which ETF is least correlated with ETF A? 6. Calculate James' portfolio risk Portfolio return: and retum if he invests in ETFS A and D (Showing work is optional.) equally. (WA = Wo = 50%) Portfolio risk: (Showing work is optional.) Calculate James' portfolio risk Portfolio return: and return if he invests 50% in ETF A (Showing work is optional.) and 50% in a risk-free asset yielding Portfolio risk: 7. 0.25% during the same 12-month investment period. (Showing work is optional.)

4. Which ETF is least risky? 5. Which ETF is least correlated with ETF A? 6. Calculate James' portfolio risk Portfolio return: and retum if he invests in ETFS A and D (Showing work is optional.) equally. (WA = Wo = 50%) Portfolio risk: (Showing work is optional.) Calculate James' portfolio risk Portfolio return: and return if he invests 50% in ETF A (Showing work is optional.) and 50% in a risk-free asset yielding Portfolio risk: 7. 0.25% during the same 12-month investment period. (Showing work is optional.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 6E

See similar textbooks

Similar questions

Market Data Rate of Return Standard Deviation Treasury Bills 4.25% 0.00% S&P 500 12.00% 21.00% Required: Using the information in the table above and the varying risk aversions below, please calculate allocations to the risky and risk-free assets. (Use cells A5 to C6 from the given information to complete this question.) Risk Aversion Percent Allocated to the Market (S&P 500) Percent Allocated to Treasury Bills 4.00 2.00 1.50
Define the term Risk Analysis?
In the table below x denotes the X-Tract Company’s projected annual profit (in $1,000). The table also shows the probability of earning that profit. The negative value indicates a loss. x f(x) x = profit -100 0.01 f(x) = probability -200 0.04 0 100 0.26 200 0.54 300 0.05 400 0.02 8 What is the expected value of profit? a $136 b $142 c $148 d $154
D & R A1 10 - 9 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. Calculate the gain/loss on spot position, the gain/loss on futures position, and the profits from this hedged position by hypothesizing…
D & R A1 10 - 8 Question 10. Minimum Variance Commodity Hedge Choc Full of Good Inc., a producer of powdered hot chocolate, has just received a large order that will require the purchase of 800 metric tons of cocoa in 3 months. The current spot price of cocoa is US $3,055 per metric ton. The standard deviation of the change in spot cocoa price is 0.2. Mr. Dulce, the CFO of Choc Full, is considering a minimum-variance hedge of this future cocoa purchase using the three-month cocoa futures contract. The contract size is 10 metric tons. The standard deviation of the change in cocoa futures price is 0.25. The covariance between the change in the spot and futures cocoa price is 0.035. The annually compounded interest rate faced by the company is 5%, the three-month storage cost is $2.5 per metric ton, and the convenience yield is $0.5 per metric ton. What is the profit from this hedged position if the spot cocoa price in three months turns out to be $3,100?
The information contained in the table below shows the expected return and standard deviation for the market and Treasury Bills. Market Data Rate of Return Standard Deviation Treasury Bills 4.25% 0.00% S&P 500 12.00% 21.00% Required: Using the information in the table above and the varying risk aversions below, please calculate allocations to the risky and risk-free assets. (Use cells A5 to C6 from the given information to complete this question.) Risk Aversion Percent Allocated to the Market (S&P 500) Percent Allocated to Treasury Bills 4.00 2.00 1.50
Risk can be defined as the effects of uncertainty on objectives and often manifests itself in risk to property and ownership, operations and ….. of funds. A) flow B) outflow
Define the term Aggregating Risk over time?
Eunice, the industry analyst of H&M, wants to determine the propensity of Major Clothingcompanies toward risk. She was able to determine the utility distribution of H&M, Uniqloand Dickies. For H&M, If the expected payoff of a venture is a loss of 125,000, the utilityvalue is 0.00, if a loss of 75,000, the utility value is .2, if breakeven, the utility value is .5,if gain of 75,000 .8 and if gain of 125,000 utility value is 1. For Uniqlo, if loss of 125,000utility value is 0, if loss of 75,000 utility value is .1, breakeven is .4, if a gain of 75,000,utility value is .7 and if gain of 125,000 utility value is 1. For Dickies, if loss of 125,000,utility value is 0, if loss of 75,000, utility value is .3 breakeven is .6, if gain of 75,000, utilityvalue is .9 and gain of 125,000, utility value is 1. What is the propensity to risk of the threeinternet companies? Explain your graph.
Correct answer What is the formula for risk free rate ##############
A plaintiff believes that there is a 30% chance that he will winIf he wins, he will gain $50,000. It costs him $5000 in non‐recoverable litigation costs to take the case to court. If the plaintiff is risk‐neutral, which of the following is true? A) The plaintiff will take the case to court with an expected net‐gain of $10,000 B) The plaintiff will take the case to court with an expected net‐gain of $15,000 C) The plaintiff will not take the case to court because he is afraid of losing. D) None of the above
Evaluate the relationship between risk probability, risk impact and risk exposure.