Chris Matthew’s investments over the past several years have not lived up to his full return expectations. He is not particularly concerned, however, because his return is only about 2 percentage points below his expectations. Do you have any advice for Chris?
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- 13 You invested 10 000 USD and your dividends are 2.1 % and capital appreciation is 7.4%. Calculate the value of your portfolio assuming that a) Ending investment value, no reinvestment, and assuming dividends are paid at year end b. Ending investment value, with reinvestment, and assuming dividends are paid at year end. (Again, this is simpler to solve using Excel or other spreadsheet. Furthermore, the numbers as shown may not add to the actual amounts shown due to rounding error.)d. What is the rate of return on your margined position (assuming again that you invest $30,000 of your own money) if XTel is selling after one year at (i) $56; (ii) $50; (iii) $44? (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.)Q15 The rate which considers the riskiness and available returns on the investments is known as a. Constant Dividend b. Maximum rate of return c. Minimum acceptable rate of return d. Constant Yield
- Question 3: your three investments are facing debt ceiling crisis and you believes there are 3 possible outcomes for the market as a whole (1) Strong case, 20% probability; (2) Average case, with a 60% probability; and (3) weak case, with 20% probability, the investor also believes the market would go up by 25% in Strong scenario, go up by 10% in the Average scenario, and go down by -15% in the weak scenario. Calculate the expected return(r ^). Calculate the standard deviation (σ). Note; use the payoff matrix table.Please do not give solution in image formate thanku. Consider three investments. You are given the following means, standard deviations, and correlations for the annual return on these three investments. The means are 0.12, 0.15, and 0.20. The standard deviations are 0.20, 0.30, and 0.40. The correlation between stocks 1 and 2 is 0.65, between stocks 1 and 3 is 0.75, and between stocks 2 and 3 is 0.41. You have $10,000 to invest and can invest no more than half of your money in any single stock. Determine the minimum-variance portfolio that yields a mean annual return of at least 0.14. PLEASE USE SOLVER (SHOW EACH STEP) AND DO NOT COPY OTHERS. THANKS!A6) Finance You invest 45% of your money in stock y and the rest in stock Z. The standard deviation of stock y annual returns is 57% and the standard deviation of stock Z's annual return is 49%. The return correlation between the two stocks is 0.3. By how many percentage points did diversification reduce your risk in this case
- Question 4 You are a financial investor who actively buys and sells in the securities market. Now you have a portfolio, including four shares: $7,500 of Share A, $4,800 of Share B, $5,700 of Share C, and $2,500 of Share D. Required: A)Compute the weights of the assets in your portfolio? B)If your portfolio has provided you with returns of 7.7%, 10.5%, - 8.7% and 14.2% over the past four years, respectively. Calculate the geometric average return of the portfolio for this period? C)Assume that expected return of the stock A in your portfolio is 13.2%. The risk premium on the stocks of the same industry are 6.8%, beta of this stock is 1.3. Calculate the risk-free rate of return using Capital market pricing model (CAPM). ? D)You have another portfolio that comprises of two shares only: $500 Tesla shares and $700 Eagle shares. Below is the data of your portfolio: Tesla Eagle Expected…Rate of return● LO5–1The Damon Investment Company manages a mutual fund composed mostly of speculative stocks. You recently saw an ad claiming that investments in the funds have been earning a rate of return of 21%. This rate seemed quite high so you called a friend who works for one of Damon’s competitors. The friend told you that the 21% return figure was determined by dividing the two-year appreciation on investments in the fund by the average investment. In other words, $100 invested in the fund two years ago would have grown to $121 ($21 ÷ $100 = 21%).Required:Discuss the ethics of the 21% return claim made by the Damon Investment Company.Consider the following information on the returns on stock and bonds investment: Scenario Profitability Stocks Bonds Recession .2 -5% +14% Normal Economy .6 +15% +8% Boom .2 +25% +4% a) Calculate the expected rate of return and standard deviation in each investment. b) Which investment would you prefer? Explain your answer. Show all of your working. Do not use Excel.
- INV2 P1 3b You are considering an investment in a portfolio P with the following expected returns in three different states of nature: Recession Steady Expansion Probability 0.10 0.55 0.35 Return on P -15% 20% 40% The risk-free rate is currently 4%, and the market portfolio M has an expected return of 16% and standard deviation of 20%, and its correlation with P is .7. Would you characterize P as a buy or sell and why?Stock A is expected to return 14 percent in a normal economy and lose 21 percent in a recession. Stock B is expected to return 11 percent in a normal economy and 5 percent in a recession. The probability of the economy being normal is 75 percent with a 25 percent probability of a recession. What is the covariance of these two securities? A) .007006 B) .005180 C) .006274 D) .003938 (Don't Hand writing in solution) .Question 4 A. Contrast the nominal rate of interest with the real rate of interest. B. Why would “a belief in the segmented markets theory of the term structure” implies “a belief in market inefficiency”. C. Suppose you purchased a stock at the end of 2017 and sold it at the end of 2019. The year-end stock prices are shown below and the stock paid no dividends. 2017 2018 2019 $100 $112 $100 (i). Compute the average annual return according to the arithmetic mean method. (ii). Compute the average annual return according to the geometric mean method. (iii). Compare the results in (i) and (ii), and indicate which is more intuitively appealing in assessing the performance of your investment. Question 5 A. What does it mean to say that a bond has a value less than one for its relative yield differential? What might account for such a difference? B. Why is the maturity of some bonds ambiguous? C. Assume the following characteristics for a particular bond: Face…