Reference no: EM13946132
It is a well known principle of finance that when investing, there is a trade off between risk and return, i.e. in order to earn a higher return, one must assume greater risk . Stock returns are calculated as the percentage change in price over a given period. Risk is measured by the variability (or volatility) of these returns. You are part of an analytical team working for a large investment bank. Management is considering two investments: A or B. Before doing so, they have asked your team to prepare a report on the risk and return profiles of these two investments. You will use descriptive statistics and your knowledge of continuous distributions to complete this task. The returns data (measured annually) for the two investments are given in the Excel file: investment Monday.xls Required:
a. Estimate descriptive statistics for each investment via Excel. Compare the two investments. Be sure to comment on the central tendency, variability and shape of these two investments (Note: use the most appropriate measure when comparing the variability of two distributions). Based on your findings, which investment would you choose and why?
b. For your chosen investment, assume that the returns are normally distributed with a mean and standard deviation (as estimated in (a) rounded to the nearest integer). Answer the following questions:
i. Find the probability that returns will exceed 55%.
ii. Find the probability that returns will be between 22% and 36%.
iii. Find the probability of making a lose.
iv. If you are given a choice between the top 3% of returns and a return of 48%, which option would you choose?
v. Between what two values of returns (symmetrically distributed around the mean) will 48.6% of all possible returns contained? c. What are the limitations of your analysis?
Would the researcher be able to obtain a sampling frame
: Would the researcher be able to obtain a sampling frame? What procedures would the researcher have to follow to obtain a probability sample?
|
Define the concept of swot analysis
: It's time to put together the business plan for Able Corporation for presentation to the SOS-C of Walden International. The outcome of this group project will be an individual presentation covering a detailed outline of FIVE SECTIONS of a business..
|
Evaluate the effectiveness of descriptive statistics
: Instructions You have been recently hired as an Epidemiological Research Assistant at your county's Health Department. It is only day 1 on the job and you have been asked to develop a presentation for the County Commissioners describing a health d..
|
Estimate the velocity boundary layer thickness
: Consider a 0.25-m-long vertical plate that is at 70°C. The plate is suspended in quiescent air that is at 25°C. Estimate the velocity boundary layer thickness and maximum upward velocity at the trailing edge of the plate.
|
Find the probability that returns will exceed 55%
: Estimate descriptive statistics for each investment via Excel. Compare the two investments. Be sure to comment on the central tendency, variability and shape of these two investments (Note: use the most appropriate measure when comparing the varia..
|
Articles found in various business journals
: Part A Select a firm that is publicly traded. This ensures you can access the needed data and information from published financial disclosures and articles found in various business journals such as Strategic Finance, Management Accounting Quarter..
|
Explain the principles and requirements of uk law
: In your role as information manager you are giving a one-day workshop on data protection and privacy legislation to managers. Develop a set of ten slides which explain the principles and requirements of UK law.
|
Test if the system operates in the production environment
: This section specifies the plans for producing updates to this software testing plan document itself and the methods for distribution of updates along with version control and configuration management requirements.
|
Inner surface of a circular tube
: The final step of a manufacturing process in which a protective coating is applied to the inner surface of a circular tube involves passage of dry, atmosphere air through the tube to remove a residual liquid associated with the process. Consider a..
|