User Account

All Pages

Individual expected returns

Assignment Help Business Management
Reference no: EM131115288

ABCO is a conglomerate that hs ksh. $ billion in stcock. Its capital is invested in four subsidiaries : Entertainment(ENT), Consumer products(CON), Pharmaceuticals(PHA) and insurance(INS). The four subsidiaries are expected to perform differently, depending on the economic environment as follows:

Investment in ksh millions

poor economy

Average economy

Good economy

ENT

1,200

20%

-5%

-8%

CON

800

15%

10%

-20%

PHA

1,400

-10%

-5%

27%

INS

600

-10%

10%

10%

The three economic outcomes have an equal likelihood of occurring.

ABCO decides to borrow KSH 8 billion at 5% interest to triple its current investment in each of its four lines of business. Assume that this new investment has the same return outcomes as the old investment.

Required: 

Given the new investment,

1. Calculate the individual expected returns for each subsidiary 

2. Calculate the implicit portfolio weights for each subsidiary and an expected return and variance for the equity in the ABCO Conglomerate

3. To whom does this return belong to? Why?

Reference no: EM131115288

Questions Cloud

Discuss why eurobonds make up the lion''s share : Describe the differences between foreign bonds and Eurobonds. Also discuss why Eurobonds make up the lion's share of the international bond market.
How monetary policy could influence the long-run behavior : Discuss how government policies can influence economic growth. Analyze how monetary policy could influence the long-run behavior of price levels, inflation rates, costs, and other real or nominal variables.
Calculate the magnetic flux in the core : Calculate the magnetic flux in the core.
Why is this distinction basic to the christian worldview : What is the creator/creature distinction? Why is this distinction basic to the Christian worldview?
Individual expected returns : 1. Calculate the individual expected returns for each subsidiary 2. Calculate the implicit portfolio weights for each subsidiary and an expected return and variance for the equity in the ABCO Conglomerate
What are collateralized debt obligations : What are collateralized debt obligations and what effect did they have on the credit crunch?
Describe how both creative and critical thinking helped you : Next, identify and describe how both creative and critical thinking helped you solve this problem in a successful way. Again, be specific and clear on how the different types of thinking helped resolve this problem.
What are structured investment vehicles and what effect : What are structured investment vehicles and what effect did they have on the credit crunch?
Find an authoritative web site on the internet : Explain why this site is authoritative (you may cite some of the criteria from the CRAAP Test), and summarize some of the suggestions of this site in your own words. Compare its suggestions to those from your book - to what extent do they overlap ..

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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