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midterm-for-investment-analysis-class(2).docx - Midterm...

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Midterm Exam Class: Investment and Portfolio Analysis Instructor: Jau-Lian Jeng, Ph.D. Notes: 1. Answer all questions. Explain your answers with short essays. Please type them into your answer sheets. 2. State all assumptions and show your calculation results. 3. Due time: Tuesday next week (07/18) in class. 1.a) Explain the concept of mean-variance analysis for portfolio construction. What are the assumptions and limitation of these analyses? What is an efficient portfolio? Does it mean that every efficient portfolio will generate profits for investors? b) How would start your own investment plan & policy for the securities in the capital market? What are the procedures you need to follow? Is assessment of the past performance of the firm(s) and future prospective the so-called “investment”? Why or why not? c) What is the purpose of CAPM (Capital Asset Pricing Model)? State the setting of the model and explain its concept. 2. You’re given with two firms’ financial information as the following. Perform the security analysis for these two firms to determine whether they are possible candidates for a part of your portfolio. The first firm X is in apparel industry and the second firm Y is of the computer industry. Balance Sheet (in millions) of Company X 2013 2014 2015 Assets Cash 230 210 970 Marketable securities 50 100 0 Accounts Receivable 1420 1350 1300 Inventory 1260 1578 1450 Plant, Building, and Equipments (net) 2873 1205 990 Investments in affiliates 0 430 1329 Total Assets 5833 4873 6039 Liabilities Short-term debts 107 130 1030 Advances from customers 421 326 534
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