Reference no: EM132444702

1. An  analyst at jiang Investments, LLC, is analyzing an investment with perpetual cash flows of $2,000. The analyst is unsure of investment risk; if she believes the beta to be 1 when if it is actually 0, what is the difference in valuation for each investment? Assum the risk free rate is 5% and the expected return of the market is 11%

2. Mike Dimitrov, an analyst at a prestigious Dashney hedge fund, is using the Fisher Effect to analyze returns in his fund's investment portfolio.

a) Suppose he wants to earn a normal 10% return on investment. If the inflation rate is 3%, what will the real rate of return be on his fund's investments?

b) Using the approximation, what is the real return?

3.The O'Brien partners, LLP, a premier hedge fund, is considering an investment in TaykowskiCorperation's common stock but would like to do it with some certainty. After doing some reaserch on the firm, an analyst found that it has an expected return of 13.4% and a standard deviation of 23.1%

a) What is the probility that the return on the stock in any one year will be lower than -9.7%

b) What is the probability that the annual return will be between -32.8% and 59.6%?

c) What does "standard deviation" measure? What is the general relationship between standard deviation and risk?