Determine the approximate expected return

Assignment Help Finance Basics
Reference no: EM1350374

Assume a project that has the following returns for years 1 to 5: 15%, 4%, -13%, 34%, and 17%. What is the approximate expected return of this investment?

11%
17%
16.60%
10%

Assume you are considering investing in two stocks, A & B. Stock A has an expected return of 16% and Stock B has an expected return of 9.5%. Your goal is to create a two-security portfolio that will have an expected return of 12%. If you have $250,000 to invest today, which of the following statements is true?

You would invest more in Stock A than you would invest in Stock B
You would invest approximately $96,000 in Stock A and $154,000 in Stock B
You would invest the same amount in each stock
Regardless of your investment choices, you cannot obtain a return of 12%.

The probability of a recession has increased to 30% and the probability for a normal state of economy is now 40%. The market risk premium has increased by 1% as well. What is the beta of Stock I and II respectively?

0.6 and 1.2
1.2 and 0.6
1.2 and 0.4
Cannot be determined with the information given

Which statements are true regarding risk? Select all that apply:

The expected return is usually not the same as the actual return
A key to assessing risk is determining how much risk an investment adds to a portfolio
Some risks cannot be decreased or mitigated by the financial manager.
The higher the risk, the higher the return investors require for the investment

Reference no: EM1350374

Questions Cloud

Modularity can have negative as well as positive effect : Modularity can have a negative as well as a positive effect. A program that is overmodularized performs its operations in very small modules, so a reader has trouble acquiring an overall perspective
What is the temperature of the air : A 20 g ball is fired horizontally with initial speed v_0 toward a 110 g ball that is hanging motionless from a 1.10 m-long string. The balls undergo a head-on, perfectly elastic collision, after which the 110 g ball swings out to a maximum angle t..
Explain why do we consider a business-cycle expansion : Explain why do we consider a business-cycle expansion different from long-run economic growth. Why do we care about the size of the long run growth rate of real GDP versus the size of the growth rate of the population.
Find the angular frequency of the blocks vibrations : A vertical tube open at the top contains 5.2 cm of oil (density 0.82 g/cm^3) floating on 5.2 cm of water. Find out the gauge pressure at the bottom of the tube.
Determine the approximate expected return : Suppose a project that has the following returns for years 1 to 5: 15%, 4%, -13%, 34%, and 17%. Determine the approximate expected return of this investment?
Cost accounting-managerial emphasis : USE SunRype and Welches which are provided for you as a Website Resource. Compare Sales and Net Income over the last 3 years. (Trend Analysis). Remember to compute trends in Dollars and Percentages.
Illustrates the cannon arousal theory : Provide a unique, hypothetical, example of a situation that accurately illustrates the Cannon arousal theory, making sure to include the chain of events that includes the stimulus, emotion(s), motivation and resulting action(s).
Risk management in tellers in four-digit numeric password : Tellers at each branch use a four-digit numeric password, and each teller's computer is transaction-coded to accept only its authorized transactions. Carry out a risk assessment.
Diversification in stock portfolios : Could you please give a report well supported, in APA format, illustrated with examples about your conclusions in this case study:

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the total variable costs

A firm is reviewing a project with labor cost of $9.90 per unit, raw materials cost of $22.63 a unit, and fixed costs of $8,000 a month.  Calculate the total variable costs of the project.

  How to do analysis of financial performance using financial

How to do Analysis of Financial performance using financial ratios and Compare and contrast the financial performance of the two companies

  Objective type problems on capital structure

Objective type problems on capital structure and cost of capital and Which project should be accepted and why

  Revenue source for health care organizations

Governmental sources and private payers are just a few examples regarding sources of health care revenue. Compare and contrast characteristics of following reimbursement sources:

  Determine the net investment

Airstat is replacing an old stamping line that cost 80,000$ 5 years ago, with a new, more efficient equipment that will cost $225,000. Shipping and installation cost an additional $20,000.

  Success of healthcare organization

I am hired by a healthcare organization that owns and operates nursing homes and assisted living facilities in several states. I need assistance with writing a paper about "how to improve the overall success of the firm".

  Computation of unit cost using activity-based costing

Computation of unit cost using activity-based costing and Determine the unit cost for each of the two products using activity-based costing

  Find initial offering price

What would the initial offering price for the following bonds (suppose semiannual compounding)?

  Computation of the price of the forward contract

Computation of the price of the forward contract and position and what are the forward price and the value of the short position in the forward contract

  Expected return and standard deviation for portfolio

Compute the expected return and standard deviation for portfolio if Diane borrows the extra $1000 at risk free rate of 4% and invest everything in market portfolio.

  Dell computers has an outstanding matter of bond

Dell Computers has an outstanding matter of bond with a par value of $1,000, paying 8 percent coupon rate. The bond has 10 yrs to maturity.

  Determine present value of future annuities

Think of something you want or need for which you currently do not have the funds for. It could be a vehicle, boat, horse, jewelry, property, vacation, college fund, retirement money, etc. How much do you need to invest today to reach that desired ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd