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

  Mandate to strengthen resilience

How does an emergency manager comply with a mandate to strengthen resilience (i.e. ability to adapt to change) through systematic preparation? (2 references)

  Determining the programmatic changes

You want the care to be affordable. Discuss if these three goals are really achievable, and, if not, what programmatic changes might be made to help accomplish

  Paragraph regarding training and development

Describe a method of knowledge management that you have been exposed to in an organization you worked for.

  What are the differences between sending a business

What are the differences between sending a business email and a personal email, and what are three specific things you should never do in a business email?

  Disrupting air travel across europe

You are a supply chain manager at a UK company. In 2010, a volcano broke out in Iceland, disrupting air travel across Europe.

  Illustrate what is the yearly return for the portfolio

B& R recommends which a client who is a moderate investor limit his or her portfolio to a maximum risk rating of 240. a. Illustrate what is the recommended investment portfolio for this client? Illustrate what is the yearly return for the portfol..

  Diagrams to illustrate the effects

Use four separate supply and demand diagrams to illustrate the effects of the following possible shocks on the equilibrium price and quantity of avocados. In each diagram clearly indicate the initial equilibrium price and quantity and the new equ..

  Barriers to entry for wearable technology

What are the barriers to entry for wearable technology? Please justify your answers.

  Microprogrammed implementation of a control unit

What is the difference between a hardwired and a microprogrammed implementation of a control unit?

  Discrimination and the robinson-patman act

Discuss price discrimination and the Robinson-Patman Act? Please provide examples.

  Determine how complex to make the wbs

So, how does a project manager determine how complex to make the WBS?

  Explain at least two major opportunities of the organization

For this assignment you will research the opportunities of your organization and provide a detailed paper on your findings. Research and thoroughly explain at least TWO major opportunities of the organization

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