Which investment would investors prefer

Assignment Help Financial Management

Reference no: EM13809215

A- Investments B and C both have the same standard deviation of 20% and have the same correlation to the market portfolio. If the expected return on B is 15% and the expected return on C is 18%, which investment would investors prefer?

B- The market return is 10% and the risk free rate is 2%. If the return on stock A is 12% with a beta of 1.5 and the variance of stock A is 25%, what is the Sharpe Ratio for stock A?

Reference no: EM13809215

Questions Cloud

Adjustments affect the income of past accounting periods : Prior period adjustments affect the income of past accounting periods. Can someone explain how prior period adjustments are shown in the financial statements?

Explain to him the significant tax and nontax issues : One of your best individual clients is thinking about starting up a new business, and he is seeking your advice on which business form he should select. In particular, he's trying to decide whether to operate the business as a partnership or a C corp..

What is the new beta of the portfolio : You hold a portfolio consisting of a $5,000 investment in each of 20 different stocks. The portfolio beta is equal to 1.15. You have decided to sell a coal mining stock (b = 1.00) at $5,000 net and use the proceeds to buy a like amount of a mineral r..

No credit refused-what is the nar with monthly compounding : The "No Credit Refused" used car dealer offers the following automobile finance opportunity. Monthly payments on the loan are 4% of the original loan amount for 36 months. That is, a loan of $10,000 would have a monthly payment of 4% of $10,000 or $4..

Which investment would investors prefer : Investments B and C both have the same standard deviation of 20% and have the same correlation to the market portfolio. If the expected return on B is 15% and the expected return on C is 18%, which investment would investors prefer? The market return..

The correlation coefficient between the two stock : Stock A has an expected return of 12% and a standard deviation of 11.7%, and Stock B has an expected return of 20% and a standard deviation of 24.2%. The correlation coefficient between the two stock is -0.4. In order to produce the minimum risk port..

What is the accumulated sum of the stream of payments : What is the accumulated sum of the following stream of payments? You have accumulated some money for your retirement. You are going to withdraw $87,617 every year at the beginning of the year for the next 16 years starting from today.

The net effect of a stock repurchase : The net effect of a stock repurchase is ________.

Estimate of the firms cost of equity from retained earnings : A. Butcher Timber Company hired your consulting firm to help them estimate the cost of equity. The yield on the firm's bonds is 10.50%, and your firm's economists believe that the cost of equity can be estimated using a risk premium of 4.85% over a f..

User Account

All Pages