User Account

All Pages

Calculate the expected return for chn ltd

Assignment Help Finance Basics
Reference no: EM132785592

Xi is a new investor and has been closely watching a company by the name of CHN Ltd., a pharmaceutical company aiming to develop a coronavirus vaccine. Xi believes the following returns are possible in 2020 and has attached a probability to each potential outcome:

Probability
Possible Return
.05
185.00%
.10
83.50%
.55
5.00%
.30
-100.00%

a) Calculate the Expected Return for CHN Ltd. in 2020. Show formula, calculation and a concluding statement in your response.

b) Calculate the Risk (Standard Deviation) for CHN Ltd. in 2020. Show formula, calculation and a concluding statement in your response.

c) Xi hired an experienced stock analyst, who advised Xi that based on his advanced modelling, the expected return and standard deviation for CHN Ltd are at 6.50% and 45.00%, respectively. Using these new variables, detail the range of returns expected by investing in CHN Ltd. at the 68% (one standard deviation) and 95% (two standard deviations) confidence levels.
Show variables, calculation and a concluding statement in your response.

d) Xi is considering investing all his savings in buying shares in CHN Ltd. Explain to Xi why he should not do this by referring to the risk/return trade-off and what action Xi can take to reduce some of the risk.

e) Do you consider CHN Ltd. to be a volatile and risky investment? Why or why not? Please calculate the Coefficient of Variation (CV) as part of your response.

Reference no: EM132785592

Questions Cloud

Create a Presentation on Strategic Brand Management : Create a Presentation on Strategic Brand Management. Company - Fonterra co-operative group limited. Analysis of brand challenges and opportunities
What is the total impact of changes : What is the total impact of these changes on the difference between profits and cash flow?
Calculate the effective interest rate for tilak : Tilak is keen to apply his finance knowledge to his real-life saving goals. He is currently 21 years of age and wishes to retire from full-time work at the age
Which the primary objective of reversing entries is to : Which the primary objective of reversing entries is to? In preparing closing entries, which of the following columns of the work sheet are the most helpful?
Calculate the expected return for chn ltd : Xi is a new investor and has been closely watching a company by the name of CHN Ltd., a pharmaceutical company aiming to develop a coronavirus vaccine.
Which could not possibly be a closing entry : Which could not possibly be a closing entry? Which of the following accounts is not closed during the closing process? Income Summary
What is an optimal complete portfolio : What is an optimal complete portfolio? How is an optimal complete found out?
Which an important purpose of closing entries is to : Which of the sequences of documents or records describes the proper sequence in the accounting cycle? Which An important purpose of closing entries is to
What is the real risk free interest rate : If the 10 year treasury bond rate is 4.9%, the inflation premium is 2.1%, and the maturity risk premium on tenure treasury bonds is 0.3%, assuming

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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