User Account

All Pages

Calculate the expected returns on stocks

Assignment Help Business Management
Reference no: EM132648456

Suppose that three stocks ( A, B and C ) and two common risk factors ( 1 and 2 ) have the following relationship:

E(RA) = (1.1) λ1 + (0.8) λ2

E(RB) = (0.7) λ1 + (0.6) λ2

E(RC) = (0.3) λ1 + (0.4) λ2

A) If λ1 = 4% and λ2 = 2%, calculate the expected returns on each stocks.

B) What are the prices expected next year for each of the stocks? (Assume that all three stocks currently sell for RM30 and will not pay a dividend in the next year).

C) The next year prices for Stocks A, B and C will actually be RM31.50, RM35.00 and RM30.50. Demonstrate the net initial investment for this portfolio.

D) The weights of this portfolio are WA = -0.5, WB = +1.0, and WC = -0.5. Calculate the net exposure to Risk Factors.

E) What is the profit from this investment?

Reference no: EM132648456

Questions Cloud

What is the required rate of return on the project : A project under consideration has an internal rate of return of 15% and a beta of 0.4. The risk-free rate is 5%, and the expected rate of return
What is a alizsa amount realized on the sale : What is a Alizsa's amount realized on the sale? After living in the house as her principle residence for 2 years, she sells the house
Examples of inflation impacting capital budgeting : What are some examples of inflation impacting capital budgeting?
Enter the total assets and the total liabilities plus owner : After all transactions have been entered, enter the total assets and the total liabilities plus owner's equity in the entry boxes below the transactions.
Calculate the expected returns on stocks : Suppose that three stocks ( A, B and C ) and two common risk factors ( 1 and 2 ) have the following relationship:
Explain a new technology that the business should deploy : Explain a new technology that the business should deploy. Be specific, don't only note the type of technology but the specific instance of technology.
What is the tax effect of the distribution to Melodie : If this is a proportionate current distribution, what is the tax effect of the distribution to Melodie and MIP? After the distribution, what is Melodie's basis
Discuss the taxation of capital contributions : Define and Discuss the taxation of capital contributions what is how do they effect taxes please include any resources you use.
What is meant by the allowance method for receivable : Give example journal entries for both. What is the difference between the direct write-off method and the allowance method for receivables?

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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