User Account

All Pages

Calculate expected return of this stock

Assignment Help Accounting Basics
Reference no: EM133020240

Question - You are an experienced investor in the securities market and you have established an investment portfolio of two blue chips five years ago: Diamond shares with current market value of $235,000 and Platinum shares with current market value of $355,000.

Required -

a) If your portfolio has provided you with returns of 10.5%, 12.6%, - 11.5%, 14.5% and 15.2% over the past five years, respectively. Calculate geometric average return of the portfolio for this period.

b) Assume that data in the table below is available for your portfolio performance, calculate the expected return, variance and standard deviation of the portfolio?

Diamond Platinum

Expected return 16.5% 23.5%

Standard Deviation of return 7% 11%

Correlation of coefficient (p) 0.45

c) Assume that beta of the Diamond shares in your portfolio is 1.5. The market portfolio expected return is 13.5%, the risk-free rate of return is 7.2%. Calculate expected return of this stock using Capital Asset Pricing Model (CAPM)?

d) Assume that you bought 2000 of Platinum shares in your portfolio for a price of $95 each, the dividend paid for this stock is $3/stock each year. Calculate the total return of this investment after five years?

Reference no: EM133020240

Questions Cloud

What would be the effect on marigold income : Marigold also incurs selling and administrative expenses of $74,400 plus $2 per pair for sales commissions. What would be the effect on Marigold income
Post the various journals : Post the various journals. Post the items as individual items or as totals, whichever would be the appropriate procedure. (No sales discounts given.)
How much is the initial cost of the equipment : Question - Tiktok Co. acquired a piece of factory equipment overseas on cash basis for 400,000. How much is the initial cost of the equipment
How much will the organization save each month : Ignoring the upfront fees for now, how much will the organization save each month by choosing the option with the lower annual interest rate
Calculate expected return of this stock : The market portfolio expected return is 13.5%, the risk-free rate of return is 7.2%. Calculate expected return of this stock using Capital Asset Pricing Model
Determine the total asset turnover : Determine the total asset turnover, before-tax return on investment, and before-tax net profit margin under the three alternative levels of current assets
Refine km processes through an integrated km working group : 1) What action(s) can commanders take that will help them organize and interface with the myriad of relevant players and information flows?
Executive summary of toolscorp operating in germany : ToolsCorp Corporation is a fictitious company that does not exist anywhere. For the purpose of this course, it is located in Tennessee. As members of the senior
Assess personal value in light of professional goals : In the same way that an organization performs with greater intention and cohesiveness when its employees and stakeholders are all working with a communal sense

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd