Q. You have 100,000 AUD to invest and are considering potential overseas investments. You are a strongly risk - averse investor and desire for the investment to have a minimal risk profile. a) Calculate the final AUD value of the given four potential investments. b) Which potential investment do you find the most appealing? c) Describe any significant complicating investment issues you should consider? Quotation Spot Bid Spot Ask Forward Bid Forward Ask AUD/USD 0.6579 0.6581 0.6650 0.6661 EUR/AUD 1.6473 1.6475 1.6810 1.6909 GBP/AUD 1.9211 1.9213 1.8959 1.9059 Note: You have been presented with outright forward quotations. Interest Rates: Country Australia U.S. Europe U.K. Interest Rates 4.35% p.a. 5.5% p.a. 4.5% p.a. 5.25% p.a.
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- Hi goodmorning can you answer questions 2 this is a continuation from question one . Question 2 Using the data generated in the previous question a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what does it show? Identify undervalued/overvalued investments from the graphAn optimal investment portfolio What an investment Portfolio is and why is portfolio management relevant to it Which investments should an Optimal Investment Portfolio be composed of, in you opinion? Briefly describe said investments and why do you think that would constitute the optimal portfolio How do you think that your measure the risk and how could you avoid such a risk through a proper Portfolio management? Is there any particular investment vehicle that you would think is better than other ones and why? Have a look on the main international Financial journals. Do you think that there is any new assets or new investment vehicles that you think that would become more important in the coming years and that should take into account?Facing the question of whether to buy and hold an asset or whether to buy one asset rather than another, which of the following factors must be considered by an individual investor? A Investor's wealth. B Expected return on one asset relative to alternative assets. C Risk of one asset relative to alternative assets. D All of the above must be considered. Which of the following is correct about the expected return on a particular asset? Question 6 options: A If the asset's beta is 1.0, then the expected return on that asset is equal to the risk-free rate of return. B If the asset's beta is zero, then the expected return on that asset is greater than the risk-free rate of return. C If the asset's beta is zero, then the expected return on that asset is equal to the risk-free rate of return. D If the asset's beta is greater than 1.0, then the…
- QUESTION 4 Below are three different investment alternatives, along with information on their expected return and return standard deviation. Suppose investors have the following utility function: U = E(R) - 12 Ao² The coefficient of risk aversion (A) for Alice is 1.5, and that for John is 2.5. Which investment will each investor pick? (hint: Find the investment giving the investor the highest utility level). Investment Expected Return E[r] Standard Deviation o 0.10 0.02 0.25 0.05 0.30 0.15 0.35 0.40 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 2 3Q/ Demonstrating the formation of an investment portfolio from the two sides (G.H) if the rates of return are favorable for each of them As follows - RG = 0.16,0.24,0.26, 0.14,0.20 RII = 0.32,0.24,0.28,0.20,0.36 %3D Required 1- Assuming that the investor will shape this portfolio. He allocated u of his wealth to the first investment and 25% of it to the second investment, and the correlation coefficient = 1 %3D what is The expected rate of return for the portfolioHi goodmorning can you answer question 3 please it's a continuation from the questions from the image. From the information generated in the previous two questions; a) Identify two investment alternatives that can be combined in a portfolio. Assume a 5050 investment allocation in each investment alternative b) Compute the expected return of the portfolio thus formed c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?
- basic economics can give us the sniff test. It provides us with a basic set of rules to which any decent investment advice must conform." These "set of rules" include all of the below EXCEPT THIS ONE. Which of the below is NOT one of these rules for wise investment? Group of answer choices Invest for the long run. Take risk, earn reward,. Engage in high risk short-term trading. Diversify your investments.Which of the following statements is correct? a. Since investors prefer more return and less risk, one will never hold a dominated asset in the risk-return sense. In other words, if asset A has a higher expected return and lower standard-deviation than asset B, then investors would only hold asset A in their optimal portfolio. b. The IRR method correctly ranks mutually exclusive projects. c. When an investment project is evaluated today, the spending that occurred in the last year has to be included in the NPV analysis. d. The payback period criterion properly considers the time value of money. e. When there are two mutually exclusive projects, the project with the highest NPV should be chosen.Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items. Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph
- “In investing, risk and return are highly correlated. Increased potential returnson investment usually go hand-in-hand with increased risk”. Critically evaluatethe above statement.ii A Financial Analyst is analyzing two investment alternatives Y and Z. Theirrates of returns under different probabilities are as follows.Probability Rate of ReturnY Z0.2 22% 5%0.6 14% 15%0.2 -4% 25%a. For Y and Z, calculate expected return, variance and standard deviation.b. Calculate the coefficient of variation for both stocks.c. If you are an investor, which company you would select for theinvestment.1. Relative to other theories portfolio formation, discuss the advantages of utilising the capital asset pricing model to analyse investment portfolios over earlier theories such Markowitz portfolio selection and mean variance. 2. As a portfolio management consultant you have been approached by a prospective investor who has investible funds of $2, 500, 000. He wants to know the investment awareness available to him which will give a rate of return with minimum risk? Clearly state the risks associated with the chosen investment. 3. Discuss the difference between active investment management and passive investment management.Problem 3: Investments X and Y both offer the same expected rate of return. The standard deviation of X is lower than that of Y's standard deviation. If an investor needs to choose between the two, which investment should he invest in? Problem 4: Investments C and D both offer the same standard deviation. The expected return of C is higher than that of D's expected return. If an investor needs to choose between the two, which investment should she invest in? Problem 5: Suppose the beta of Company A is 0.8, the risk-free rate is 2.7 percent, and the market risk premium is 5.5 percent. Calculate the expected return for Company A