Compare alpha equity fund

Assignment Help Finance Basics
Reference no: EM133076333

Tom Cruise wants to compare Alpha equity fund against the S&P 500. Alpha fund uses the idea of Risk Allocation by investing in the same firms as in the S&P 500 but with different allocation. Alpha fund's sector allocation remains the same as the market index (capitalisation weighted). However, the allocation of each firm in each sector is based on equal risk contribution (each firm in a sector will have the same Marginal Contribution to Risk as others firm that sector). Tom has asked you to explain if Alpha fund will have a lower or higher volatility than the S&P500?

Reference no: EM133076333

Questions Cloud

Portfolio management process : Assume you are a portfolio manager for an institutional investment company speaking to a client. An investment policy statement (IPO) is an important part of th
Determine the cost of equity : If price-to-book ratio at the end of 2005 equals 1.00, and return on beginning of year equity is expected to remain constant, then determine the cost of equity
Calculate walmart cost of capital : Using this information, please calculate Walmart's cost of capital to a percentage with two decimals (for example 1.87%).
Calculate the variance and standard deviation : Suppose that the standard deviation of returns from a typical share is about 0.60 (or 60%) a year. The correlation between the returns of each pair of shares is
Compare alpha equity fund : Tom Cruise wants to compare Alpha equity fund against the S&P 500. Alpha fund uses the idea of Risk Allocation by investing in the same firms as in the S&P 500
What the net present value of this investment : Your bank is considering a new check clearing machine to automate the clearing house function. What the Net Present Value of this investment
Case study on bharti airtel : a) Bharti Airtel plans to expand its network and prepare for the launch of 5G services. The board hadapproved raising up to 21,000 crore by issuing additional o
Determine the mark-up percentage on product cost : The total cost of $35 is made up of $24 variable cost and $11 fixed cost. The desired profit is $8 per unit. Determine the mark-up percentage on product cost
Internal and external purchasing power of aud : Assume that AUD11,324 is the current price level in Australia, while GBP19,886 is the current price level in the United Kingdom for an equivalent bundle of good

Reviews

Write a Review

Finance Basics Questions & Answers

  How much interest will she pay

Margo borrows $1700, agreeing to pay it back with 2% annual interest after 9 months. How much interest will she pay?

  Prepare a summary of how the venture might benefit

Prepare a summary of how the venture might benefit from receivables financing if commercial customers are extended credit for thirty days on their purchases

  How would you assess the value of this liability

Explain what questions would you raise with the CEO over the firm's litigation liability - How would you assess whether the firm should record a liability for this risk, and if so, how would you assess the value of this liability?

  Describe the origin of the Federal Reserve System

Question - Briefly describe the origin of the Federal Reserve System. Describe the functions of the Fed district banks

  How has citi made new approach a success

Read the article, "Citi's Customized Marketing Approach," and discuss how Citi has differentiated its marketing strategy from other large financial institutions

  Compute the mirr statistic for project

Compute the MIRR statistic for Project I if the appropriate cost of capital is 12 percent

  Provide background information about the agency and mission

Provide background information about the agency, mission, goals, objectives, departments, and strategic plan. (Title this section Introduction.)

  Determining the investment return-investment return

HillCom Corp stock was $75.10 per share at the end of last year. Since then, it paid a $2.60 per share dividend last year. The stock price is currently $78.10.

  What is the average accounting rate of return

Projected net income for the four years is $8,000, $20,000, $15,000, and $22,000. What is the average accounting rate of return (in percents)?

  Evaluate a real-life medium-term

Evaluate a real-life medium-term (1-3 years) investment opportunity across these asset classe: stocks, bonds, alternative investments. Instructions:

  Calculate the npv for the proposed investment

Charlie Company is attempting to evaluate the feasibility of investing $95,000 in a piece of equipment that has a 5-year life. The firm has estimated the cash inflows associated with the proposal as shown below. Assume the firm has a 12% cost of c..

  What is the required rate of return for stock

What is the required rate of return for this stock?

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