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Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 13.0% and 15.0%, respectively. The beta of A is .8, while that of B is 1.3. The T-bill rate is currently 7%, while the expected rate of return of the S&P 500 index is 14%. The standard deviation of portfolio A is 20% annually, while that of B is 41%, and that of the index is 30%.
Think about what are the appropriate performance measures to use in question a and b, and why.
a) If you currently hold a market index portfolio, what would be the alpha for Portfolios A and B? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.)
b) If instead you could invest only in bills and one of these portfolios, calculate the sharpe measure for Portfolios A and B. (Enter your answer as a decimal rounded to 2 decimal places.)
Your portfolio has a beta of 1.24. The portfolio consists of 13 percent U.S. Treasury bills, 28 percent stock A, and 59 percent stock B. Stock A has a risk level equivalent to that of the overall market. What is the beta of stock B? Provide detailed ..
Recreational Supplies Co. has net sales of $12,660,000, an ROE of 23.00 percent, and a total asset turnover of 2.52 times. If the firm has a debt-to-equity ratio of 0.76, what is the company’s net income?
When financial institutions attempted to liquidate assets to repay maturing money market instruments over the period form 2007-2008 the result was downward pressure on asset prices causing the run on money market instruments to worsen.
the first step in an external analysis is to determine the industry to which your target business is classified.
Buy shares stock for $23.10. Expecting it to pay dividends of $1.09, 1.16, and 1.2345 in years 1,2, and 3 expecting to sell it at price of 30.82 at the end of three years. Calculate the growth rate in dividends? Calculate the expected dividend yield ..
Suppose that you have $82,500 to invest and would like to purchase 1500 shares of ABC Corp.'s shares which are currently trading for $100.00 per share. Law requires that all brokers have an Initial Margin of 50% but your broker demands a 55% Initial ..
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Six years ago you placed $ 250 in a savings account which is now worth $ 1,040.28. When you put the funds into the account, you were told it would pay 24 percent interest. You expected to find the account worth $ 908.80. What compounding did you thin..
What is the yield to maturity on a $1,000 face value discount bond maturing in two years that sells for $800 today? What is the annual rate of return on a bond with an annual coupon rate of 10 percent, a face value of $100,000, and its price rises fr..
You are the manager of an independent manufacturer that sells protective cases for the Samsung Galaxy. Samsung produces half of its phones at a plant near Hong Kong and the other half at a plant located near Shanghai.
Bushwhacker Mowing needs $360 million to support growth. If it issues new common stock to raise the funds, the flotation (issuance) costs will be 4 percent. If Bushwhacker can issue stock at $60 per share, how many shares of common stock must be issu..
The distribution of a firm's capital between debt and equity is its
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