AlternativeInvestment100% of asset F50% of asset F and 50% of asset G350% of asset F and 50% of asset Hb. The standard deviation of returns over the 4-year period for alternative 1 is%. (Round to two decimal places.)The standard deviation of returns over the 4-year period for alternative 2 is%. (Round to two decimal places.)The standard deviation of returns over the 4-year period for alternative 3 is%. (Round to two decimal places.)c. The coefficient of variation for alternative 1 is(Round to three decimal places.)The coefficient of variation for alternative 2 i |(Round to three decimal places.)c. The coefficient of variation for alternative 1 is(Round to three decimal places.)The coefficient of variation for alternative 2 is(Round to three decimal places.)The coefficient of variation for alternative 3 is(Round to three decimal places.)d. On the basis of your findings, which of the three investment alternatives do you recommend? Why?is the best choice because the assets are(Select the best answers from the drop-down menus.)Alternative Portfolio analysis You have been given the expected return data shown in the first table on three assets - F, G, and H- over the period 2019-2022: .Using these assets, you have isolated the three investment alternatives shown in the following table: .a. Calculate the average return over the 4-year period for each of the three altenatives.b. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives.c. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.d. On the basis of your findings, which of the three investment alternatives do you think performed better over this period? Why?a. The expected return over the 4-year period for alternative 1 is %. (Round to two decimal place.)The expected return over the 4-year period for alternative 2 is%. (Round to two decimal place.)The expected return over the 4-year period for alternative 3 is %. (Round to two decimal place.)b. The standard deviation of returns over the 4-vear period for alternative 1 is%. (Round to two decimal places.)The standard deviation of returns over the 4-year period for alternative 2 is %. (Round to two decimal places.)(Click on the icon here in order to copy the contents of the data table belowinto a spreadsheet.)Historical ReturnYearAsset FAsset GAsset H201916%17%14%202017%16%15%202118%15%16%202219%14%17%

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a. Calculate the average return over the 4-year period for each of the three alternatives. b. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives. c. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives. d. On the basis of your findings, which of the three investment alternatives do you think performed better over this p

a. Calculate the average return over the 4-year period for each of the three alternatives. b. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives. c. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives. d. On the basis of your findings, which of the three investment alternatives do you think performed better over this p

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Alternative 1 2 WN 3 Investment 100% of asset F 50% of asset F and 50% of asset G 50% of asset F and 50% of asset H Year 2019 2020 2021 2022 Asset F 10% 11% 12% 13% Historical Return Asset G 11% 10% 9% 8% Asset H 8% 9% 10% 11%
You have been asked for your advice in selecting a portfolio of assets and have been supplied with the following data:. You have been told that you can create two portfolios-one consisting of assets A and B and the other consisting of assets A and C-by investing equal proportions (50%) in each of the two component assets. a. What is the average expected return, r, for each asset over the 3-year period? b. What is the standard deviation, s, for each asset's expected return? c. What is the average expected return, rp, for each of the portfolios? d. How would you characterize the correlations of returns of the two assets making up each of the portfolios identified in part c? e. What is the standard deviation of expected returns, Sp, for each portfolio? f. What would happen if you constructed a portfolio consisting of assets A, B, and C, equally weighted? Would this reduce risk or enhance return?
Assume you are considering a portfolio containing Asset 1 and Asset 2. Asset 1 will represent 37% of the dollar value of the portfolio, and asset 2 will account for the other 63%. Assume that the portfolio is rebalanced at the end of each year. The expected returns over the next 6 years, 2021–2026, for each of these assets are summarized in the following table: Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Projected Return Year Asset L Asset M 2021 −9% 33% 2022 15% 5% 2023 26% −9% 2024 4% 18% 2025 −9% 33% 2026 33% −18% . a. Calculate the expected portfolio return, rp, for each of the 6 years. b. Calculate the average expected portfolio return, rp, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, sp, over…
The historical returns for two investments A and B—are summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each investment's returns. c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a. a. On the basis of a review of the return data, which investment appears to be more risky? Why? (Choose the best answer below.) A. The riskier investment appears to be investment B, with returns that vary widely from the average relative to investment A, whose returns show less deviation from the average. B. The riskier investment appears to be investment A, with returns that vary widely from the average relative to investment B, whose returns show less deviation from the average. C. Investment A and investment B have equal risk…
Suppose you are considering investing your entire portfolio in three assets A, B and C. You expect that after you invest, four possible mutually exclusive scenarios will occur, with associated returns (in %) for each of the three assets as listed below. The probability of each scenario is given below (Attached image). Find the expected returns and standard deviations of Asset A, B & C. (HINT: the expected return is given by the probability-weighted sum of returns in each scenario. The expected standard deviation is given by the square root of the probability-weighted sum of squared deviations from the expected return.) Is there any reason to invest in Asset A given its low expected return and high standard deviation?
Consider a portfolio with two assets and three states of nature at the end of the year. Would it be possible to create a portfolio that is risk-free under these circumstances?
The historical returns for two investments-A and B-are summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each investment's returns. c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a acce a. On the basis of a review of the return data, which investment appears to be more risky? Why? (Choose the best answer below.) OA. The riskier investment appears to be investment B, with returns that vary widely from the average relative to investment A, whose returns show less deviation from the average. B. The riskier investment appears to be investment A, with returns that vary widely from the average relative to investment B, whose returns show less deviation from the average. C. Investment A and investment B have equal…
The historical returns for two investments-A and B-are summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each investment's returns. c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a. a. On the basis of a review of the return data, which investment appears to be more risky? Why? (Choose the best answer below.) A. The riskier investment appears to be investment B, with returns that vary widely from the average relative to investment A, whose returns show less deviation from the average. B. Investment A and investment B have equal risk because the average returns are the same. C. The riskier investment appears to be investment A, with returns that vary widely from the average relative to investment B, whose…
How do I calculate portfolio return and risk for an equally weighted portfolio using expected returns for the upcoming year using the CAPM model in excel?
An investor recorded the following annual returns of one of his investments. You are required to calculate and comment on; 1. Mean return. 2. Variance and standard deviation of the return. 3. Geometric return. Year 2016 2017 2018 2019 2020 Return 15% 17% 19% 10% -5%
Calculate a one-year holding period return (HPR) for the following two investment alternatives: Which investment would you prefer, assuming they are of equal risk? Explain. The HPR for investment X is %. (Enter as a percentage and round to two decimal places.)
Below are the annual returns provided by TSCM. Calculate average annual return experienced by an investor over the last five years. Calculate the standard deviation of the portfolio return over this period. (See sheet "TSCM" in the attached Excel.) Period Return 2021 -51.0% 2020 43.0% 2019 61.0% 2018 -5.0% 2017 -19.0% In the year 2022, TSCM return is 21%. Calculate TSCM's Jensen's Alpha for the year period in annual terms. Use the below data. Beta = 2.3 Risk-free rate = 1% Expected Market Return = 8%

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