Calculate the arithmetic average return

Assignment Help Finance Basics
Reference no: EM132801763

Marcus has an investment portfolio that paid the rate of return of 24.75%, -11%, - 30%, 19%, 15.5%, 12% and 20% over the last seven (7) years.

Required:

a) Calculate the arithmetic average return and the geometric average return of this portfolio.

b) Discuss the difference between arithmetic average return and the geometric average return. When should Marcus use a specific average return?

c) If the following information is available for Marcus's portfolio in the forecast for next year, calculate the expected return and identify the risk of return by computing the variance and the standard deviation.

State of economy Probability of the economic state Rate of Return

Boom 0.55 25%

Normal 0.30 17%

Recession 0.15 -8%

Reference no: EM132801763

Questions Cloud

Describe the various abilities and learning styles : As you explore the website, consider your future classroom, grade level and challenges you might face as a new teacher with a classroom of students with.
Write about how big data is used in healthcare services : Research and write about "How big data is used in healthcare services" include image and hyperlinks and APA references/ citation texts.
What is the free cash flow to the equity of the firm : If the firm issued $150 million of new debt and repaid $185 million of existing debt, what is the free cash flow to the equity of the firm?
Compute net operating profit after tax : Compute net operating profit after tax (NOPAT) for 2016, assuming a federal and state statutory tax rate of 37%
Calculate the arithmetic average return : Marcus has an investment portfolio that paid the rate of return of 24.75%, -11%, - 30%, 19%, 15.5%, 12% and 20% over the last seven (7) years.
How leadership theory and academic research combined : A statement of how leadership theory and academic research combined with the disciple-making activities of mentoring and formational worship influence.
Calculate the current total market value of the company : Debt: $20,500,000 paying 9.5% coupon bonds outstanding with 15 years to maturity, an annual before-tax yield to maturity of 8% on a new issue. The bonds current
What is the minimum price Hank would need : Hank purchased a $28,000 car two years ago using an 8 percent, 5-year loan. What is the minimum price Hank would need to receive for his car
Analyzing content for cultural competency : Using "Ten Quick Ways to Analyze Children's Books for Racism and Sexism," select a piece of children's literature, young adult literature, informational.

Reviews

Write a Review

Finance Basics Questions & Answers

  The current yield to maturity on similar bonds is 12

jim busby calls his broker to inquire about purchasing a bond of disk storage systems. his broker quotes a price of

  How much would the investment be worth

Downtown Medical Center is starting an endowment fund to pay for the expenses of a community outreach pediatric program. The expenses are $800,000 per year.

  What is the relative frequency of spades

What is the relative frequency of spades rounded to two decimal places dealt to player A.

  Cash flow can be said to equal

A. income before depreciation and taxes plus taxes.  B. income before depreciation and taxes plus depreciation. C. income after taxes minus depreciation.

  Displays the revenues and expenses of a company

1 Which financial statement displays the revenues and expenses of a company for a period of time?

  Type of business and wonders

Mort does not know much about this type of business and wonders about its long term potential. An important trend for Mort to consider is that:

  Calculate how many months until you turn age 65

Having enough money to cover retirement is critical to one's comfort and dignity later in life. This exercise is designed

  What is the value of the loan

The bank has stated that the annual interest rate they will charge you is 7.5%. What is the value of the loan?

  What is the ytm

Crossfade Co. issued 13-year bonds two years ago at a coupon rate of 8.8 percent. The bonds make semiannual payments. If these bonds currently sell for 112 percent of par value, what is the YTM?

  What is after-tax weighted average cost of capital

Rumolt Motors has 3939 million shares outstanding with a price of $ 50$50 per share. In? addition, Rumolt has issued bonds with a total current market value.

  Computation of operating cash flows from capital project

Computation of operating cash flows from capital project and evaluating a project which will increase sales by $50,000 and costs by $30,000

  Examine advantages of financing with portfolio of currencies

Compare two methods that a company can use in order to finance international trade. Examine the advantages and disadvantages of financing with a portfolio of currencies.

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!

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