e few alternatives of investme available in the market right n end any THREE (3) of investm ves besides invest in the stock
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- Question 2 a) Plot the Security Market Line (SML).b) Superimpose the CAPM’s required return on the SML.c) Indicate which investments will plot on, above and below the SML?d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graphProvide an overview and classification of alternative investments within a few paragraphs. The term here refers to any assets or strategies that are not based strictly on stocks or fixed income instruments. Make sure to mention all alternative investments you are familiar with and in each case provide a list of advantages and disadvantages in having this asset in the portfolio.Of the following investment vehicles, which is the best and which is the worst? Choose from common stocks, mutual funds, ETFs, REITs. Explain why.
- With the aid of relevant examples, contrast value investing with growth investing and show how these are applicable to the portfolio management process. Discuss which type of shares are most suitable to be assessed with the Piotrowski framework? 3. Critically discuss any recent news article of your choice within the context of the Efficient Market Hypothesis. 4. What are the key differences between the Arbitrage Pricing Theory (APT) and the Capital Asset Pricing Model (CAPM) as they relate to portfolio management?Consider a capital market with two securities. The payoffs of these securities in the two equally likely states of the world are given in the table below. Рayolf Price Security State 1 State 2 PA=2 A 4 2 PB-3 B a. Discuss the concepts of complete capital markets, pure (Arrow-Debreu) securities, and pure factor portfolios. Establish whether the capital market in this case is complete and determine the prices of the pure socurities by arbitrage.Which of the following investment has the lowest risks and lowest returns! EE savings bonds. Money market savings accounts. Real estate. Exchange-traded funds.
- The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in: A. the capital market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio. B. the capital market line which shows that all investors will only invest in the riskless asset. C. the security market line which shows that all investors will invest in the riskless asset only. D. the security market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio. E. None of these.Find correct statements about the risk premium: (a) The risk premium indicates the amount of compensation investors require for taking risks. (b) The risk premium should be the same across different stocks. (c) The greater common risks an investment has, the higher risk premium investors would require. Group of answer choices: 1. (a) 2. (a) and (b) 3. (a) and (c) 4. (a), (b), and (c)Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items. Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph
- Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.Explain each of the investment instruments stated below that offered by financial institutions. These are the investment instruments you like to invest. Explain and justify why. Options FuturesThe Capital Market Line (CML) expresses the risk-return trade-off for a portfolio as follows: E(Rport )=RFR+Oport [(E(Rm)-RFR)/om ] Required: Extend this expression to allow for the evaluation of any individual risky Asset i. Explain the steps in details.