are171a-homework-4

# are171a-homework-4 - Finance Homework 4 ARE 171A Winter...

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ARE 171A Finance Homework 4 Winter 2010 A. Havenner As always, rates are annual effective unless otherwise noted. Calculating the initial statistics (average returns and their variances) very carefully will make this assignment easier. Use T-1=9 in the denominator when calculating the variance. 1. Risk and Return of Individual Assets: Two of our students have secretly been in business, and their companies have been trading publicly for a while. Fong Mi has succeeded wildly with her consulting firm FM Ltd. (trading under the symbol FMLTD) specializing in econometrics and finance, while a second student has founded Alexandra's Assets, an equally successful asset management firm trading under the symbol AA). Ten years of data on percentage returns for Fong Mi's consulting firm and Alexandra's asset management firm are given below: Date FMLTD AA Date FMLTD AA 2000 4.64 5.98 2005 10.80 14.56 2001 10.80 12.74 2006 6.88 11.57 2002 8.88 9.10 2007 13.76 4.03 2003 10.32 9.88 2008 13.76 16.51 2004 9.36

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## This note was uploaded on 03/18/2010 for the course ARE 171A taught by Professor Whitney during the Winter '08 term at UC Davis.

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are171a-homework-4 - Finance Homework 4 ARE 171A Winter...

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