Calculate the percentage return of the portfolio

Assignment Help Financial Management

Reference no: EM131958156

Jamie Peters Invested $103,000 to set up the following portfolio one year ago:

Asset	Cost	Beta at purchase	Yearly income	Value today
A	$20,000	0.78	$1,100	$20,000
B	$31,000	0.93	$1,600	$32,000
C	$40,000	1.56	$0	$46,500
D	$12,000	1.25	$300	$12,5000

a. Calculate the portfolio beat on the basis of the original cost figures

b. Calculate the percentage return of each asset in the portfolio for the year

c. Calculate the percentage return of the portfolio on the basis of original cost, using income and gains during the year.

d. At the time Jamie made his investments, investors were estimating that the market return for the coming year would be 12%. The estimate of the risk-free rate of return averaged 3% for the coming year. Calculate an expected rate of return for each stock on the basis of its beta and the expectations of market and risk-free returns

e. On the basis of the actual results, each stock in the portfolio performed differently relative to those CAPM-generated expectations of performance. What factors could explain these differences?

Reference no: EM131958156

Questions Cloud

What is the total value of the firm right : The company has the following market values of debt and equity: Market value of debt: $50 Market value of equity: $60 Therefore, the total market value.

Impulse is the act of making a decision with no reason : When a customer walks in to a store they take more than they need and the impulse to buy is greater.

Difference when making revisions within an organization : Having a clear chain of command can make the difference when making revisions within an organization.

How will you use the given concepts in your future career : What is the importance of these concepts to the professional discipline? How will you use these concepts in your future career?

Calculate the percentage return of the portfolio : Calculate the percentage return of the portfolio on the basis of original cost, using income and gains during the year.

Transnational and metanational structures : Why companies choose matrix, transnational and metanational structures and why? Why large multinational companies choose metanational structures?

What is the price of the company stock today : A company expects to pay a dividend of $3.50 per share one year from today. The dividend is expected to grow at 25 percent per year for two years.

Five forces of competition to the international airline : Please apply Porter's Five Forces of competition to the international airline industry.

Will her interest income be the same next year : How much interest must Jan report on Schedule B for the first year? Will her interest income be the same next year?

User Account

All Pages