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You have recently completed your training contract and managed to save a small amount of money during the three years of your contract. You are thinking about investing the money and are considering investment opportunities which would maximize your return. A friend of yours has recently received a ‘hot tip’ from his uncle for HiFly Ltd, a share on the JSE, which is currently providing high returns. You are looking at investing 40% of your money in HiFly Ltd and the balance in Treasury Bills. The average rate of return on Treasury Bills next year will be 9%. You have been provided with the following relevant information: (Information attached in image below)  ROUND ALL ANSWERS TO TWO DECIMAL PLACES   REQUIRED: Calculate the expected return of HiFly Ltd. Answer% Calculate the expected return of the market. Answer% Calculate the standard deviation of HiFly Ltd. Answer% Calculate the standard deviation of the market. Answer% Calculate the covariance of returns between the market and HiFly Ltd. Answer Calculate the expected return on your portfolio. Answer%

You have recently completed your training contract and managed to save a small amount of money during the three years of your contract. You are thinking about investing the money and are considering investment opportunities which would maximize your return. A friend of yours has recently received a ‘hot tip’ from his uncle for HiFly Ltd, a share on the JSE, which is currently providing high returns. You are looking at investing 40% of your money in HiFly Ltd and the balance in Treasury Bills. The average rate of return on Treasury Bills next year will be 9%. You have been provided with the following relevant information: (Information attached in image below)  ROUND ALL ANSWERS TO TWO DECIMAL PLACES   REQUIRED: Calculate the expected return of HiFly Ltd. Answer% Calculate the expected return of the market. Answer% Calculate the standard deviation of HiFly Ltd. Answer% Calculate the standard deviation of the market. Answer% Calculate the covariance of returns between the market and HiFly Ltd. Answer Calculate the expected return on your portfolio. Answer%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have recently completed your training contract and managed to save a small amount of money during the three years of your contract. You are thinking about investing the money and are considering investment opportunities which would maximize your return. A friend of yours has recently received a ‘hot tip’ from his uncle for HiFly Ltd, a share on the JSE, which is currently providing high returns. You are looking at investing 40% of your money in HiFly Ltd and the balance in Treasury Bills. The average rate of return on Treasury Bills next year will be 9%. You have been provided with the following relevant information:

(Information attached in image below)

 ROUND ALL ANSWERS TO TWO DECIMAL PLACES

 

REQUIRED:

Calculate the expected return of HiFly Ltd. Answer%

Calculate the expected return of the market. Answer%

Calculate the standard deviation of HiFly Ltd. Answer%

Calculate the standard deviation of the market. Answer%

Calculate the covariance of returns between the market and HiFly Ltd. Answer

Calculate the expected return on your portfolio. Answer%

You have recently completed your training contract and managed to save a small amount of money during the three years of your contract. You are thinking about investing the money and are considering investment opportunities which would maximize your return. A friend of yours has recently received a 'hot tip' from his uncle for HiFly Ltd, a share on the JSE, which is currently providing high returns. You are looking at investing 40% of your money in HiFly Ltd and the balance in Treasury Bills. The average rate of return on Treasury Bills next year will be 9%. You have been provided with the following relevant information: State of the economy Probability of Rates of return if state occurs occurrence HİFly Ltd Market Boom 0.1 17% 20% Normal 0.6 13% 15% Recession 0.3 -30% -20%
Transcribed Image Text:You have recently completed your training contract and managed to save a small amount of money during the three years of your contract. You are thinking about investing the money and are considering investment opportunities which would maximize your return. A friend of yours has recently received a 'hot tip' from his uncle for HiFly Ltd, a share on the JSE, which is currently providing high returns. You are looking at investing 40% of your money in HiFly Ltd and the balance in Treasury Bills. The average rate of return on Treasury Bills next year will be 9%. You have been provided with the following relevant information: State of the economy Probability of Rates of return if state occurs occurrence HİFly Ltd Market Boom 0.1 17% 20% Normal 0.6 13% 15% Recession 0.3 -30% -20%
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