What is the expected return on this portfolio

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Reference no: EM132352833

Corporate Finance Assignment -

Question 1: Given the following information, calculate how many years this project should be run before it is retired. Assume the cost of capital is 10% p.a. Please Show your detail calculation steps.

	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flows ($)	(10 000)	2200	3000	3500	2500	2000
Retirement Values ($)	0	6000	5000	4000	3000	2000

Question 2:

Part A: What is the expected return on this portfolio? What is the beta of this portfolio? Does the portfolio have more or less systematic risk than an average asset?

Security	Amount invested	Expected return	Beta
Share 1	$3000	8%	0.8
Share 2	$4000	12%	1
Share 3	$3000	15%	1.10

Part B: An investor would like to evaluate the performance of her portfolio using the Treynor ratio. The past year realized return and systematic risk of the portfolio, the benchmark portfolio, given by the S&P/ASX share price index, and government bonds are:

	Realised Return	Systematic risk estimate
Portfolio	11	1.2
S&P/ASX share price index	9	1.0
Government Bonds	5	0

The portfolio has outperformed or underperformed the market benchmark? Please illustrate your answers.

Reference no: EM132352833

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Reviews

len2352833

8/6/2019 1:50:11 AM

It’s a small assignment just 3 questions 2 calculations and one theoretical No word limit. Each of the following question worth 10 marks, please answer all of them. If needed please use Harvard referencing style. There is no word limit, but it is necessary that you provide answers with explanations. Total Marks: This assignment is worth 20 marks (20 % of the total marks in the unit).

len2352833

8/6/2019 1:50:00 AM

Instructions: Students are required to cover all stated requirements. Your answer must be both uploaded to Moodle in word file and handed over a printed copy. You need to support your answers with appropriate Harvard style references where necessary. Include a title/cover page containing the subject title and code and the name, student id numbers. Please save the document as FIN201AT1_first name_Surename_Student Number Eg:

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