Reference no: EM132672521

Problem 1: Example of investing $100K in assets A, B and C with historical AVG return of 15% from asset A, 20% from asset B, and 10% from asset C, what is the simple or arithmetic average?

Option 1: 12%

Option 2: 12.5%

Option 3: 15%

Option 4: 16.5%

Problem 2: In the above $110K allocation problem, if you decided to allocate 30% weight in A, 50% weight in B, 20% weight in C, where the historical mean ROIA = 15%, ROIB = 20% and ROIC = 10%, what is the WAVG?

Option 1: 15.75%

Option 2: 15%

Option 3: 16.5%

Option 4: 17.25%

Problem 3: What is the limitation of HPR?

Option 1: Holding period doesn't vary across different assets.

Option 2: Holding period varies across different assets and different investors.

Option 3: Holding period varies across different assets, but doesn't vary across different investors.

Option 4: Holding period doesn't vary across different assets, but varies across different investors.