Reference no: EM133057136
Problem 1:
Clara Romero bought a share of Tesla, Inc. for $ 299.66 at the beginning of 2018. At the end of the year, Clara decided to sell the share whose market value was $ 331.29. Determine the return obtained by Clara for this investment.
Problem 2:
Joseph Cintron bought 1,000 shares of Waste Management, Inc. at $ 113.74 a share. Waste Management, Inc. paid $ 2.50 in dividends per share. After a year, Mr. Cintrón decided to sell his shares at the market price of $ 112.94 per share. Determine the return on investment obtained by Mr. Cintron and the total amount of money that he earned or lost in the transaction per year.
Problem 3:
Here are the annual returns for five different stocks. Determine the expected return and risk for a period of five years for each of the stocks.
|
|
Rendimientos
|
|
Año
|
WMT
|
ADRE
|
MSFT
|
GOOG
|
BIIB
|
|
20x0
|
12.0%
|
7.5%
|
12.3%
|
13.1%
|
8.5%
|
|
20x1
|
9.3%
|
4.3%
|
12.0%
|
16.2%
|
9.1%
|
|
20x2
|
8.2%
|
8.1%
|
11.9%
|
15.7%
|
9.0%
|
|
20x3
|
10.3%
|
9.2%
|
11.8%
|
18.2%
|
8.7%
|
|
20x4
|
11.5%
|
6.1%
|
12.0%
|
19.3%
|
8.8%
|
Problem 4:
a. Find the coefficient of variation (CV) for each of the actions in problem 3.
b. Explain which of the investments a risk-averse investor would prefer and which a risk-lover investor would prefer.
Problem 5:
a. Using the data provided in problem 3, determine the return and risk for a portfolio made up of the following three stocks if you want to distribute your investment as follows: 20% in ADRE; 65% in MSFT, and 15% in GOOG.
b. How would the portfolio be affected if you distributed your investment as follows: 30% in ADRE; 25% on MSFT and 45% on GOOG?
c. Which of the two portfolios would a risk-seeking investor prefer and why?