Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Tom Max TMP, quantitative analyst, has developed a portfolio construction model about which he is excited. To create the model, TMP made a list of the stocks currently in the S&P 500 Stock Index and obtained annual operating cash flow, price, and total return data for each issue for the past five years. As of each year-end, this universe was divided into five equal-weighted portfolios of 100 issues each, with selection based solely on the price/cash flow rankings of the individual stocks. Each portfolio’s average annual return was then calculated. During this five-year period, the linked returns from the portfolios with the lowest price/cash flow ratio generated an annualized total return of 19.0 %, or 3.1 percentage points better than the 15.9 % return on the S&P 500 Stock Index. Max also noted that the lowest price-cash-flow portfolio had a below-market beta of 0.91 over this same time span.
a. Briefly comment on TMP use of the beta measure as an indicator of portfolio risk in light of recent academic tests of its explanatory power with respect to stock returns.
b. You are familiar with the literature on market anomalies and inefficiencies. Against this background, discuss TMP use of a single-factor model (price–cash flow) in his research
A firm’s dividends have grown over the last several years. 10 years ago the firm paid a dividend of $2. Yesterday it paid a dividend of $7. What was the average annual growth rate of dividends for this firm? Round answer to two decimal places.
Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .17 .358 .458 .338 Good .43 .128 .108 .178 Poor .33 .018 .028 ?.062 Bust .07 ?.118 ?.258 ?.098 What is t..
FHC Inc., a U.S. corporation, has an account payable due in 90 days. Use the following information to evaluate the optimal strategy of hedging its transactional exposure - MMHC Inc., a U.S. corporation, has an Euro-denominated account receivable i..
In this assignment describe and explain the differences between the three different types of interest rates one from the Federal Reserve, one from a bank for business, and one from any financial institution for a consumer loan.
The best approach to convert an infinite series of asset purchases into perpetuity is known as
Stock A has an expected rate of return of 12% and a standard deviation of returns of 40%. Stock B has an expected rate of return of 18% and variance of returns of 0.36. The correlation coefficient between the returns of Stock A and Stock B is 0.25.
Understand the foreign investments of a company's financial goals and the risks. What we are doing to allow our government a chance
Last year the selling corporation had earnings before interest and taxes (operating income) equal to $1 million. it paid $200,000 in dividends to its stockholders and $100,000 in interest to its creditors. During the year, the company also repaid a b..
What are the advantages and disadvantages of a call provision from the viewpoints of both a firm and its bondholders? If you were the CEO of a firm
Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $2.10 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 12.60 per..
You have 100 business clients who own businesses that you insure against floods. The probability density function of the number of claims k per year for these 100 clients when rainfall is at or below average (which happens 50% of the time) is describ..
Why is it sometimes misleading to compare a company’s financial ratios with those of other firms that operate in the same industry?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd