Determine the expected return, Cost Accounting

Assignment Help:

Imagine a world in which there are only two investment assets: Hasbro Inc. Stock (HAS) and McDonalds stock (MCD). The table below lists annual total returns (%) for each of the last ten years (calculated based on adjusted closing prices for the first day of February in each month provided by YahooFinance (thank you Yahoo!). For each of the questions below, please write down the formula you would use to calculate these values by hand (or with a calculator) even if you use Excel or another program to calculate the values.

398_calculate the expected return.png

a. Based on these data, calculate the expected return on HAS and MCD.

 b. What is the variance of the return for HAS? The standard deviation? Do the same calculations for MCD. 

c. What is the covariance of HAS returns with MCD returns? What is the correlation of the two returns?  

d. Evaluate the risk and return for a portfolio with each of the weight combinations below. Use the standard deviation-not the variance-to characterize risk. You may use the Excel file on SmartSite to calculate the answer, but do not forget to write the formula you would have used to do the calculation by hand below. Which of these portfolios would you definitely choose not to adopt, no matter your risk preferences? Why?

645_calculate the expected return 1.png


Related Discussions:- Determine the expected return

Determine the cost of the finished goods inventory, Manufacturing statemen...

Manufacturing statements and cost behavior  Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-g

Prepare the material cost budget of products of a company, Prepare the Mate...

Prepare the Material Cost Budget of products of a Company For a company along with many products, a periodic budget would be developed given as: Assume a firm has 3 products X

Developing and insight into labour and material variance, Developing and In...

Developing and Insight into Labour and Material Variance The calculation of labour and material variances is not sufficient; we require knowing how the variance could have typ

Disadvantages of using standard costs, Purposes of standard cost accounting...

Purposes of standard cost accounting connection - suppose you were a management consultant and the client asked you the advantages and disadvantages of using standard costs and cos

Find the amount capitalized for the patent account, Gomez incurred $350,000...

Gomez incurred $350,000 of research and development costs to develop a product for which a patent was granted on January 2, 2008. Legal fees and other costs associated with the re

Current overhead cost allocation system, Sam Edwards has been the accountin...

Sam Edwards has been the accounting manager for Jade Manufacturing in a highly competitive international market for ten years. Jade Manufacturing produces heavy equipment for two m

Capital project, is sale of salvage from capital project recorded as gain/l...

is sale of salvage from capital project recorded as gain/loss or applied back to project costs

Internal sources of funds, While we are looking for sources funds it is oth...

While we are looking for sources funds it is other than natural to start searching from home. What do we have? During examining the requirement for working capital we could also ma

Overhead variance, The following information is for the third quarter of th...

The following information is for the third quarter of this year: Planned Actual Production 92,000 units 87,000 units Direct labor hours 506,800 DL hrs 380,000 DL hrs Fixed manuf

Compute the sales activity variance for each product, The next year's budge...

The next year's budget for Benny, Inc., is given below: Product 1-2 Sales $945,000-688500 Variable costs 459,900-297,000 Fixed costs 300,000-3

Write Your Message!

Captcha
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