User Account

All Pages

Discuss impact on beta of the fund and expected return

Assignment Help Financial Accounting
Reference no: EM132877252

Mr Lee manages a fund which consists of 3 investments, namely, A, B and C. The information pertaining to the investments and the market are given below:

Investment         Amount        Beta

Stock A           $30,000         1.6

Stock B        $50,000              1.2

Stock C          $20,000          -0.2

Market Risk Premium = 6%

Risk Free Rate = 3%

Investors in Mr Lee's fund have complained that the fund's volatility is high. They are not comfortable with the relatively large fluctuations in the fund's value. Ms Lim, the analyst, suggests that the fund sells some of the high beta stocks and invests the proceeds in bonds.

Problem 1: Discuss the impact on the beta of the fund and its expected return.

Reference no: EM132877252

Questions Cloud

Understanding and prevention terrorism : What can local law enforcement agencies do to prevent terrorism? Will community partnerships have any effect on terrorism?
How long will he have to leave money in the account to have : How long will he have to leave his money in the account to have P40,000? Suppose Carlo has $34,500 to invest but wants P40,000 for a new pair
What the initial capital investment was : If a 2-year capital project has an internal rate of return factor equal to 1.69 and net annual cash flows of $68000, the initial capital investment was
Compute the beta and expected return of mr lee fund : Compute the beta and expected return of Mr Lee's fund. Mr Lee manages a fund which consists of 3 investments, namely, A, B and C.
Discuss impact on beta of the fund and expected return : Discuss the impact on the beta of the fund and its expected return. Mr Lee manages a fund which consists of 3 investments, namely, A, B and C.
Compute the value today of a starlight company common share : Compute the value today of a Starlight Company common share based on the dividend discount model. Based on the computed value of the share
Determine ideal cost of equity : Ideal plans to borrow $500,000 to finance this project. Determine Ideal's cost of equity, cost of debt as well as the weighted average cost of capital.
Compute the operating cash flows related to the project : Compute the operating cash flows related to the project.
Why would hesitate to get into debt : What would be the argument of tech companies like Apple, Google etc to hoard a lot of excess cash in their balance sheet? Why would hesitate to get into debt

Reviews

Write a Review

Financial Accounting Questions & Answers

  Has your firm recorded any impairment expenditures

Identify the key estimates and assumptions used by your firm in conducting the impairment testing - Has your firm recorded any impairment expenditures

  Describe the applicable guidance requirements

Respond to Jensen Inc. Describe the applicable guidance requirements, including excerpts as needed to support your response

  Calculate the NPV and IRR

Using a spreadsheet program like Excel, calculate the NPV and IRR of the following scenario:

  How much is the in account at the end of month

Mary deposits, If the account pays 2.9% per annum, compounded quarterly, how much is the? in her account at the end of the 27? month?

  Indicate the tax effect of the transaction

Mr. T sold a piece of jewellery from his personal collection, Indicate the tax effect of the transaction for 2019. Identify if there are carry forwards for 2020

  What the new land should be recorded on pharoahs books at

What amount of gain or loss should Waterway recognize on the exchange (assuming lack of commercial substance)? The new land should be recorded on Pharoah's book

  What circumstances training and coach of staff definitely

Under what circumstances would training and coach of staff definitely be required as part of a cloud project? Explain in detail with an specific example.

  What hoyle asset turnover is

What Hoyle's 2019 asset turnover is? For 2019, Hoyle Company reports beginning of the year total assets of €900,000, end of the year total assets

  Prepare the journal entries to record the sale of the bonds

Prepare the journal entries to record the sale of the bonds on September 1 and the first semiannual interest payment on November 1, 2014.

  Predetermined shop overhead rate per direct hour

Amoruso engine shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Determine the predetermined shop overhead rate per direct hour.

  Write clearly and concisely about financial accounting

Write clearly and concisely about financial accounting and reporting using proper writing mechanics.

  Accounting system uses special journals

Adria Lopez created Success Systems on October 1, 2013. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer.

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