Determine the profit and portfolio return over the quarter

Assignment Help Financial Management
Reference no: EM131323587

You are the manager of a stock portfolio worth $10,500,000. It has a beta of 1.15. During the next three months, you expect a correction in the market that will take the market down about 5 percent; thus, your portfolio is expected to fall about 5.75 percent (5 percent times a beta of 1.15). You wish to lower the beta to 1. A particular stock index futures contract with the appropriate expiration is priced at 425.75 with a multiplier of $500.

a. Should you buy or sell futures? How many contracts should you use?

b. In three months, the portfolio has fallen in value to $9,870,000. The futures has fallen to 402.35. Determine the profit and portfolio return over the quarter. How close did you come to the desired result?

Reference no: EM131323587

He other is passive-index portfolio with expected retun

You have two portfolios for your clients to choose from or combine. One is an actively managed portfolio with an expected return of 18% and standard deviation of 28%. The othe

Corporation is expected to pay the dividends

Far Side Corporation is expected to pay the following dividends over the next four years: $10, $8, $6, and $4. Afterward, the company pledges to maintain a constant 4 percent

What is the earnings per share figure

Draiman, Inc., has sales of $602,000, costs of $256,000, depreciation expense of $62,500, interest expense of $29,500, and a tax rate of 40 percent. The firm paid out $44,500

Consumer lending business

Assume that your partner and you are in the consumer lending business. A customer, talking with your partner, is discussing the possibility of obtaining a $10,000 loan for thr

Compute the profit on each of the four sales

AJB Real Estate purchased a ten-acre tract of land for $320,000. The company divided the land into four lots of two and one-half acres each. Lot 1 had a beautiful view of the

Rapidly expanding chain of fast-food restaurants

Caliber's Burgers and Fries is a rapidly expanding chain of fast-food restaurants, and the firm's management wants to estimate the cost of equity for the firm. As a frim appro

What is risk reduction of investing in portfolio containing

You invest one-third of your wealth in each of three stocks. The expected return and standard deviation of each individual stock is 10 percent and 20 percent, respectively. Ea

Statements concerning qualified target-benefit pension plans

All of the following statements comparing a profit-sharing plan to a pension plan are correct, EXCEPT: Which of the following statements concerning the basic provisions that a


Write a Review

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