Finance- 17 problems- Due Friday, May 29th by 10PM (EST)

| December 1, 2017

1. A portfolio is
invested 29.8% in Stock A, 10.9% in Stock B, and the remainder in Stock C. The
expected returns are 14.6%, 24.5%, and 8.8% respectively. What is the
portfolio’s expected returns?
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 12.345% then enter as 12.35 in
the answer box.

2. You own a
portfolio invested 19.2% in Stock A, 19.27% in Stock B, 28.6% in Stock C, and
the remainder in Stock D. The beta of these four stocks are 0.82, 0.69, 0.94,
and 0.91. What is the portfolio beta?
Note: Enter your
answer rounded off to two decimal points. For example, if your answer is 12.345
then enter as 12.35 in the answer box.

3. You have observed
the following returns on ABC’s stocks over the last five years:
3.8%, 8.3%, 12.1%,
10.9%, 2.3%
What is
the arithmetic average returns on the stock over this five-year period.
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

4. Suppose a stock
had an initial price of $60.63 per share, paid a dividend of $4.6 per share
during the year, and had an ending share price of $97.82. What are the
percentage returns?
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

5. Suppose a stock
had an initial price of $70.09 per share, paid a dividend of $5 per share
during the year, and had an ending share price of $86.52. What are the
percentage returns if you own 25 shares?
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

6. Suppose a stock
had an initial price of $87.89 per share, paid a dividend of $4.1 per share
during the year, and had an ending share price of $97.77. What are the
percentage returns?
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

7. Suppose a stock
had an initial price of $72.88 per share, paid a dividend of $4.7 per share
during the year, and had an ending share price of $106.67. What are the dollar
returns?
Note: Enter your
answer rounded off to two decimal points. Do not enter $ or comma in the answer
box. For example, if your answer is $12.345 then enter as 12.35 in the
answer box.

8. You have observed
the following returns on ABC’s stocks over the last five years:
3.9%, 8.7%, -12.8%,
13.9%, -2.7%
What is
the arithmetic average returns on the stock over this five-year period.
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

9. You have observed
the following returns on ABC’s stocks over the last five years:
4.1%, 8.5%, -5.9%,
12.6%, -4.2%
What is
the geometric average returns on the stock over this five-year period.
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

10. Calculate the
expected returns of your portfolio

Stock

Invest

Exp Ret

A

$137

2.4%

B

$942

17.6%

C

$313

22.7%

Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 12.345% then enter as 12.35 in
the answer box.

11. Calculate the
expected returns of your portfolio

Stock

Invest

Exp Ret

A

$332

6.4%

B

$913

19.8%

C

$1,612

21.6%

Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 12.345% then enter as 12.35 in
the answer box.

12. You have
observed the following returns on ABC’s stocks over the last five years:
3.8%, 8.1%, 4.8%,
10.2%, 8.9%
What is
the geometric average returns on the stock over this five-year period.
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

13. Suppose the
returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.
Compute the standard
deviation of the returns.
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

14. Suppose a stock
had an initial price of $85.48 per share, paid a dividend of $6.8 per share
during the year, and had an ending share price of $94.87. If you own 48 shares,
what are the dollar returns?
Note: Enter your
answer rounded off to two decimal points. Do not enter $ or comma in the answer
box. For example, if your answer is $12.345 then enter as 12.35 in the
answer box.

15. You own a
portfolio invested 21.65% in Stock A, 12.78% in Stock B, 13.99% in Stock C, and
the remainder in Stock D. The beta of these four stocks are 0.48, 1.2, 0.79,
and 1.26. What is the portfolio beta?
Note: Enter your
answer rounded off to two decimal points. For example, if your answer is 12.345
then enter as 12.35 in the answer box.

16. Based on the
following information, calculate the expected returns:

Prob

Return

Recession

30%

47.4%

Boom

70%

12.7%

Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 12.345% then enter as 12.35 in
the answer box.

17. Suppose the
nominal rate is 10.37% and the inflation rate is 4.01%. Solve for the real
rate. Use the Fisher Effect formula.
Note: Enter your
answer in percentages rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

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