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The Investment Committee is big on active management, and believes that there are areas/pockets of inefficiencies in the market. Knowing that you have taken Finance 455 at X-University, the Committee asks that you look into constructing an equity portfolio benchmarked to the Dow Jones Industrial Average (DJIA). They would like for you to make an equity portfolio that can be expected to create at least 2% of alpha (above the DJIA) with a tracking error budget of 4% (or stated differently, an Information Ratio of 0.50).
Based on that information, and with the Excel Spreadsheet given (showing historical return data for the DJIA component stocks), design a portfolio that can yield a 2% enhance in expected return over the benchmark (alpha), with a maximum of 4% tracking error (Information Ratio at least 0.50).
Risk Premium A risk premium is the extra or excess which is return on a risky asset relative to the return on risk-free assets. Therefore, it defines the additional return that
Question : (a) Every company has its own idea about how to organise itself and its work. Different companies doing the same work may have different organisation structures and
Risk Management The major risks involved in the implementation of syringe management plan include the following. Ideas to manage them are as well mentioned along with the risks
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Beta- measure of systematic risk for an investor who holds the shares of one company, it is total variance that is more relevant. But for most usual active investor who wishes to d
what are risk in requirement determination?
Explain about the mechanisms of financial system for risk to be transferred. Financial systems also give mechanisms for risk to be transferred. For instance insurance contracts
1. You are given the following long-run annual rates of return for alternative investment instruments: US Government T-Bills 3.5% Large-cap common stocks 12.1% Long-
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