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- QUESTION 1 Aisyah is a new investor; she approached RHB Securities and the firm has provided her with the following information. Probability (%) Expected return (%) Stock X Stock Y 20 13 15 30 14 13 50 15 12 Using these stocks, she has identified two investment portfolio alternatives: Alternative 1 50% Stock X, 50% Stock Y Alternative 2 60% Stock X, 40% Stock Y Required: a. Calculatethe expected return and the standard deviation for Stock X and Stock Y.the possibility that an investment portfolio will not generate the investor's expected rate of return. Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio. Consider the following case: Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table: Stock Artemis Inc. Babish & Co. Cornell Industries Danforth Motors What is the expected return on Andre's stock portfolio? O 11.10 % 14.99% 8.32% Percentage of Portfolio Expected Return 20% 30% 35% 15% 16.65% 8.00% 14.00% 13.00% 5.00% Standard Deviation 27.00% 31.00% 34.00% 36.00% Suppose each stock in Andre's portfolio has a correlation coefficient of 0.4 (p 0.4) with each of the other stocks. If the weighted average of the risk of the individual securities (as measured by their standard deviations) included in the partially diversified four-stock portfolio is 32%, the portfolio's standard deviation…Questions: a. Compute the expected return for stock X and for stock Y b. Compute the standard deviation for stock X and for stock Y. c. Determine the best course to take for investing.
- Use attachments to answer questions This question relates to Diagram 5 from the 9.2 diagrams, which shows four different feasible portfolios plotted on a set of risk/return axes. Which portfolio would a risk-averse investor prefer - Portfolio A or Portfolio G? Select one: a. Portfolio A. b. Portfolio G. c. The investor would be indifferent between the two portfolios. d. We cannot tell without more information about the investors attitude towards risk (i.e. how risk-averse the investor is).(b) The graph below shows possible portfolios with different combinations of risky portfolio and risk-free investment on new efficient frontier. E(R port ) NEW EFFICIENT FRONTIER PA RFR E(o pon) port i. Explain how do investors achieve new efficient frontier. ii. Explain the investor's risk profile of portfolio Pa and portfolio Pg.The concept of Portfolio Effect indicates that the more assets added to the portfolio, the less risk of the total portfolio Select one: O True O False Ne Jump to... CHAPTER 5-STOCK VALUA
- You are exploring the use of APT in making investment choices. You have identified three factors labelled F1, F2, and F3 with corresponding risk premia RP1 = 3%, RP2 = 6%, and RP3 = 2%. A stock with ticker ABC has historically shown returns which have followed the equation: rABC=0.14+.50F1+1.20F2+.8F3+eABC What is the equilibrium rate of return for stock ABC using the APT, if the T-bill rate is 5%?Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. What is the expected return of the complete portfolio? Group of answer choices a. 10.32% b. 5.28% c. 9.62% d. 8.44% e. 7.58%Step by step explaination (use attached diagram) This question relates to Diagram 6 from the diagrams, which shows the probability distributions of returns for Shares N, P and Q. In which share would a risk-averse investor be most likely to invest? Select one: a. Share N b. Share P c. Share Q d. We need more information about the investor's risk tolerance to determine which share the investor would prefer.
- You are planning for long term investment in a stock. After specific analysis you have two options i.e., Stocks of Company A and Stocks of Company B. You have following data on the stock prices of both companies; Time Line Share A Share B 2010 15 125 2020 41 320 Please select the share that is more likely give you better return in the long run. Also, show your selection process.As a portfolio manager, you are required to take investment decision from the following two alternative scenarios: (Decision Criterion: Select a portfolio on relative risk basis) Scenario 1: Construct a portfolio with 60% investment in ICC: Expected Return (in %) Risk (as Std Div.) Covariance BPL 12 4 BPL & ICC: -1.2 ICC 7 2 Scenario 2: Construct equal weighted portfolios from following securities Expected Return (in %) Risk (as Std Div.) Covariance PSL 11 5 PSL & IPL: 3.75 IPL 8 3b. As an equity portfolio manager, you may use certain risk-adjusted performance measures. Describe and discuss the following measures of performance evaluation! Treynor Index, William Sharpe, Michael Jensen Using the following table evaluate which is better than other using three different measure of performance evaluation. Asset X E(R)% 12 beta Stdv 1.25 16 Y 11 1.0 12 Risk-free 3 0 0 Market index 12 1 12