Richmond Business SchooIFNN 5200 Corporate FinanceAssignment ThreeModern Portfolio TheoryAll questions valued equally1. The following data encapsulates historic data on shares in Pariah plc and Asylum plc:"State of the world"PsReturn on PariahReturn on Asylum(s)0.15-0.05-0.071.0.350.050.050.30.070.1030.20.100.12(a) What is the expected return and risk (measured by standard deviation) of each of thesesecurities?(b) What is the covariance and correlation coefficient between the returns on these twosecurities?(c) Would you recommend investment in a portfolio of (only) these two assets, with Asylumplc accounting for three-quarters of the total portfolio? Explain fully.

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PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter11: Investment Planning

Section: Chapter Questions

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Identify which company’s shares you would recommend as the better investment. Provide explanations. Liquidity Panda Koala Working capital 94,100 144,750 Current ratio 2.53 2.55 Quick/acid-test ratio 1.08 1.06 Solvency Panda Koala Debt ratio 0.32 0.36 Debt-to-equity ratio 0.47 0.56 Time interest earned 23.41times 19.05times Efficiency Panda Koala Accounts (and notes) receivable turnover 20.18times 14.82times Days' sales in receivables (average collection period) 22days 27days Inventory turnover 7.70times 4.91times Days' sales in inventory 57days 82days Total asset turnover 1.83times 1.90times Profitability Panda Koala Gross profit margin 29.98 %…
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