a)
To discuss:
Calculation of portfolio beta.
Introduction:
Beta is an indicator of the risk tha measures the systematic risk of a risky investment by comparing the risky investment with the average risky asset in the market.
b)
To discuss:
Percentage of return of each asset of the portfolio.
Introduction:
Return: In financial context, return is seen as percentage that represents the profit in an investment.
c)
To discuss:
Percentage of return of portfolio.
Introduction:
Return: In financial context, return is seen as percentage that represents the profit in an investment.
d)
To discuss:
Expected
Introduction:
e)
To discuss:
Comparing performance.
Introduction:
Beta is an indicator of the risk tha measures the systematic risk of a risky investment by comparing the risky investment with the average risky asset in the market.
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Chapter 8 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
- es The four people below have the following investments. Invested Amount $ 11,800 14,800 21,800 17,800 Jerry Elaine George Kramer Req 1A Interest Rate Required: 1-a. Calculate the future value at the end of three years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) 1-b. Who has the greatest investment accumulation? Req 1B Jerry Elaine George Kramer 12% 8 7 9 Complete this question by entering your answers in the tabs below. Compounding Quarterly Semiannually Future Value Annually Annually Calculate the future value at the end of three years. Note: Use Excel or a financial calculator. Round your answers to 2 decimal places. 2arrow_forwardFor each of the investments below, calculate the rate of return earned over the period. Cash Flow During Period - $900 14,000 5,000 70 1,500 (Click on the icon here in order to copy the contents of the data table above into a spreadsheet.) Investment A B C D E Beginning-of-Period End-of-Period Value Value $1,400 140,000 55,000 500 14,000 $400 115,000 49,000 200 12,600arrow_forwardInvestment A trust account manager has $1,000,000to be invested in three different accounts. Theaccounts pay 6%, 8%, and 10%, respectively, andthe goal is to earn $86,000 with the amount investedat 10% equal to the sum of the other two investments. To accomplish this, assume that x dollarsare invested at 6%, y dollars at 8%, and z dollars at10%. Find out how much should be invested in eachaccount to satisfy the conditionsarrow_forward
- John began his investing program with a $5,500 initial investment. The table below recaps his returns each year as well as the amounts he added to his investment account. What is his dollar-weighted average return? Time 0 1 2 3 4 A) 1.5 percent B) 2.2 percent C) 2.0 percent D) 1.8 percent E) 2.6 percent Investment $ 5,500 $ 2,000 $ 2,600 $ 3,000 $ 900 Return 8.5 % 5.0 % 4.5% 9.0 % 2.5%arrow_forwardFor each of the investments below, calculate the rate of return earned over the period. Investment Cash Flow During Period - $300 18,000 с 5,000 D 60 E 1,500 (Click on the icon here in order to copy the contents of the data table above into a spreadsheet.) A B The rate of return on Investment A is %. (Round to two decimal places.) Beginning-of-Period End-of-Period Value Value $2,100 160,000 40,000 300 12,000 $700 113,000 45,000 100 13,200arrow_forwardCalculate the EAR of the following investment, entered as a percentage (Example: if your answer is 0.145, enter 14.5) Year Number Cashflow 0 -11400 1 3500 2 3000 3 3100 4 2800 Your Answer:arrow_forward
- Finance Initial Investment $17,766 End of Year Income 1 $5,919 2 $4,285 3 $5,143 4 $3,532 5 $1,800 (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) pop-up content ends PrintDone Justin Lieberman must earn a minimum rate of return of 9.22% as compensation for the risk of the following investment: a. Use present value techniques to estimate the IRR on this investment. b. On the basis of your finding in part a, should Justin make the proposed investment? Question content area bottom Part 1 a. The yield on this investment is enter your response here%. (Round to two decimal places.)arrow_forwardCalculate the internal rates of return of the following investment: Net investment -$1,100 Year 0 Net cash flows +6,500 Year 1 -11,400 Year 2 +6,000 Year 3 Round your answers to the nearest whole number and enter them in ascending order. IRR1: 0% IRR2: % IRR3: %arrow_forwardAnswer in Excel Financial Calculations a. If you are lucky and win $50,000 in a tax-free lottery next week, you have already decided to invest that amount in a broadly-based stock market fund which historically has earned 6% return per year. How much will you expect have at the end of these 20 years if you believe stock market history is an excellent guide to the future? b. If you believe you will need at least $300,000 more than you have now to retire in twenty-five years, how much must you contribute at the end of each year into a retirement fund that pays 5% interest annually?arrow_forward
- Design a spreadsheet for the preparation of projected income statements, balance sheets, and statements of cash flows for MSC for Year 8Year 12. Also forecast the financial statements for each of these years under three scenarios: (1) best case, (2) most likely, and (3) worst case. The following sections describe the assumptions you can make.arrow_forwardQuestion 3: Assume that we wish to determine the expected value and standard deviation of returns of Assets A. The expected returns of assets A and probabilty for each of the next 5 years are given in columns 1 and 2 respectively in the table. Find the expected value and standard deviation of returns for Asset A Year Asset A Prob. 2019 18,00 16,00 13,00 9,00 11,00 0,25 0,20 0,15 0,20 0,20 2020 2021 2022 2023arrow_forward1.4 The table represents the cash flows received from the investments at the end year. Each investment requires an initial investment of $1000. Answer the questions related to the two investment opportunities in the table below. Year 1 2 3 4 5 Investment A 225 215 250 225 205 Investment B 220 225 250 250 210 There are two approaches to evaluate this investment. Show the necessary calculations. • Assume the interest rate ot 4.33%. Use present value analysis to determine which investment you should choose? Calculating the rate of returns of the investment, which investment would you choose and why?arrow_forward
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning