Question

You have been given the following return data, three assets A,B, and C over the period 2021-2024

Expected Return

Year Asset A Asset B Asset
C

2021 8%
11% 5%

2022 10%
9% 7%

2023 12%
7%
9%

2024 14%
5%
11%

Using these assets, you have isolated three investment alternatives:

Alternative Investment

1 100% of asset A

2 45% of asset A and
55% of asset B

3 45% of asset A and
55% of asset C

a. Calculate the average portfolio return for each of the three alternatives.

b. Calculate the standard deviation of returns for each of the three alternatives.

c. On the basis of your findings in parts a and b, which of the three investment alternatives would you recommend? Why?

Answer #1

**Results:**

**Excel
formulas:**

You have been given the expected return data shown in the first
table on three assets—F, G, and H—over the period 2016-2019
Year
Asset F
Asset G
Asset H
2016
7
10
15
2017
6
8
16
2018
3
19
19
2019
11
9
11
Using these assets, you have isolated the three investment
alternatives shown in the following table.
Alternative
Investment
1
100% of asset F
2
75% of asset F and 25% of asset G
3
50% of...

Portfolio analysis???You have been given the
expected return data shown in the first table on three
assetslong dash—?F,?G, and H long dash—over the period?
2016-2019:
Expected Return
Year
Asset F
Asset G
Asset H
2016
15?%
16?%
???
13?%
???
2017
16?%
15?%
14?%
2018
17?%
14?%
15?%
2019
18?%
13?%
16?%
Using these? assets, you have isolated the three investment
alternatives shown in the following? table:
Alternative
Investment
1
?100% of asset F
2
?50% of asset F and?...

Portfolio analysis???You have been given the
expected return data shown in the first table on three
assetslong dash—?F, ?G, and H—over the period? 2016-2019:
Expected Return
Year
Asset F
Asset G
Asset H
2016
18%
19%
???
16%
???
2017
19?%
18%
17%
2018
20?%
17%
18?%
2019
21%
16%
19%
Using these? assets, you have isolated the three investment
alternatives shown in the following? table:
Alternative
Investment
1
?100% of asset F
2
?50% of asset F and? 50%...

you have been given the expected return data shown in the first
table on three
assetslong dash—F,
G, and
H long dash—over
the period 2016-2019:
Expected Return
Year
Asset F
Asset G
Asset H
2016
16%
17%
14%
2017
17%
16%
15%
2018
18%
15%
16%
2019
19%
14%
17%
Using these assets, you have isolated the three investment
alternatives shown in the following table
Alternative
Investment
1
100% of asset F
2
50% of asset F and 50% of...

You have been given the expected return data shown in the first
table on three assets—F, G, and H—over the period 2015-2018
Year
Asset F
Asset G
Asset H
2015
9
12
15
2016
8
9
16
2017
5
21
19
2018
13
6
11
a. Find the
expected return, variance, std dev and coefficient of variation for
each asset.
b. Now consider a portfolio that consists of 25% of F,
50% of G and 25% of H. Find the expected...

You have been given the expected return data shown in the table
on two assets, F and G, over the period 2010-2013.
Expected return
Year
Asset F
Asset G
2010
16%
15%
2011
12
13
2012
18
17
2013
20
12
If you invest 70% of your funds in
asset F and 30% to asset G,
Calculate the expected return over the 4-year period for the
portfolio.
Calculate the standard deviation of returns over the 4-year
period for the portfolio.

2) You are given the following information for CareMed
Corp.:
2020 FCFE $8,000,000
FCFE growth, 2021 – 2024 6.6%
Constant growth in FCFE beyond 2024 5.0%
First dividend expected in year-end 2022 $2.25
Growth in dividend in 2023 and 2024 9%
Constant growth in dividend beyond 2024 8.6%
Shares outstanding 1,500,000
Beta coefficient 1.5
Risk-free rate 3.0%
Rate of return on the Market Portfolio 8.0%
a) What is the appropriate discount rate for CareMed’s
stock?
b) What is the intrinsic...

You are given the following three stocks and you have been asked
to propose a portfolio for a wealthy client. The client wants
either a 2 asset (A-B, B-C, or A-C) or a 3 asset(A-B-C) portfolio.
In any case, the portfolios must be equal weighted. Which of the
four portfolios do you suggest to the client? Why?
Show your work step by step.
Stocks
Mean Return
Std of Return
X
1.5
4
Y
4
8
Z
7
1
Correlations
X...

You have been provided the following data about the securities
of three firms, the market portfolio, and the risk-free asset:
a.
Fill in the missing values in the table. (Leave no cells
blank - be certain to enter 0 wherever required. Do not round
intermediate calculations and round your answers to 2 decimal
places. (e.g., 32.16))
Security
Expected Return
Standard Deviation
Correlation*
Beta
Firm A
.100
.41
.86
Firm B
.150
.60
1.41
Firm C
.170...

You have been provided the following data on the securities of
three firms, the market portfolio, and the risk-free asset:
a. Fill in the missing values in the table.
(Leave no cells blank - be certain to enter 0 wherever
required. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Security
Expected Return
Standard Deviation
Correlation*
Beta
Firm A
.115
.26
.91
Firm B
.135
.45
1.46
Firm C
.116
.71
.30
The...

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