The Standard & Poor's 500 Index (often referred to as S&P 500) is a weighted average of prices of highly traded stocks in the United States. Suppose there is a portfolio indexed to the S&P 500 and another one indexed to the price of gold. The accompanying table shows historical data from the period 1982-2010, which suggest the expected value of the annual percentage returns associated with these portfolios. Portfolio S&P 500 Gold (fine ounce) Expected value of return (percent) 8.5 5.1 Which portfolio would a risk-neutral investor prefer? S&P 500 Gold What can be inferred about the risk of the two portfolios if a risk-averse investor chooses to invest in gold?

49) If stock prices follow a random walk, it means that stock prices are just as likely to rise as to fall at any given time. True False

If the risk-free rate is 3 percent and the risk premium is 5 percent, what is the required return?

In stock index future hedging, the optimal number of contracts used to hedge depends on the beta of the equity portfolio when the stock index represents the entire stock market. Which of the following regarding the beta (in the above statement) is correct?      The beta is the slope of the best fit line when the futures price (on the y-axis) is regressed against the spot price (on the x-axis).            The beta is the slope of the best fit line when the spot price (on the y-axis) is regressed against the futures price (on the x-axis).            The beta is the slope of the best fit line when the change in the futures price (on the y-axis) is regressed against the change in the spot price (on the x-axis).            The beta is the slope of the best fit line when the change in the spot price (on the y-axis) is regressed against the change in the futures price (on the x-axis).            None of the above

Suppose the world can be described in two states, and two stocks are available with future per share prices: State X Y 1 $10 $15 2 $20 $11 The current prices for stock X and Y are $13 and $10, respectively. a) Suppose now you have saved $3900 to invest in stocks (X and Y), what is your investment strategy to maximize your total wealth when the future is in State 1? b) Based on a), what is your investment strategy if you want to keep your future wealth as smooth as possible between the two States?

I need help with question d

What is the present value of a firm with a four-year life span that earns the following stream of expected profit? Use a risk-adjusted discount rate of 10 percent. Treat all profits as being received at year-end. Year 1 - $20 000 Year 2 - $40 000 Year 3 - $70 000 Year 4 - $90 000

The following information is taken from Johnson & Johnson's annual reports. Its common stock is listed on the New York Stock Exchange, using the symbol JNJ.  Johnson & Johnson           Domestic Sales International Sales   Employees Year ($ million)       2010 29,437 32,124   114.0 2011 12,907 36,107   117.9 2012 29,830 37,394   127.6 2013 31,910 39,402   128.1 2014 34,782 39,548   126.5 2015 35,687 34,387   127.1 2016 37,811 34,079   126.4 2017 39,863 36,597   134.0 2018 41,884 39,697   135.1             Using the period 2010–12 as the base period, compute a simple index of international sales for each year from 2013 to 2018. (Round your answers to 1 decimal place.)The index (2010–2012 = 100) for selected years is: Year         Index 2010 2011 2012 2013 2014 2015 2016 2017 2018