Week 3 HW

Week 3 HW - The percentage return is $100/$1,000 = 0.10 =...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Karen Pang FINC 5000 Webster University Week 3 HW 6-1 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4) = 1.12 6-2 6% + (13% - 6%)0.7= 10.9%. 6-3 r s = 5% + 6%(1.2) = 12.2%. 6-5 a. m = (0.3)(15%) + (0.4)(9%) + (0.3)(18%) = 13.5%. j = (0.3)(20%) + (0.4)(5%) + (0.3)(12%) = 11.6%.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
b. σ M = [(0.3)(15% - 13.5%) 2 + (0.4)(9% - 13.5%) 2 + (0.3)(18% -13.5%) 2 ] 1/2 = = 3.85%. σ J = [(0.3)(20% - 11.6%) 2 + (0.4)(5% - 11.6%) 2 + (0.3)(12% - 11.6%) 2 ] 1/2 = = 6.22%. c. CV M = = 0.29. CV J = = 0.54. 6-9 r p = 18%(0.10) + 2%(0.15) + 16%(0.25) + 12%(0.50) = 12.1%. Minicase a. Investment return measures the financial results of an investment. They may be expressed in either dollar terms or percentage terms. The dollar return is $1,100 - $1,000 = $100.
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: The percentage return is $100/$1,000 = 0.10 = 10%. b. 1) Because the treasury must (and will) redeem the bills at par regardless of the state of the economy. 2) Because the firm’s sales, and hence profits, will generally experience the same type of ups and downs as the economy. Repo Men is considered by many investors to be a hedge against both bad times and high inflation, so if the stock market crashes, investors in this stock should do relatively well. Stocks such as Repo Men are thus negatively correlated with (move counter to) the economy....
View Full Document

This note was uploaded on 04/08/2010 for the course MBA 5000 taught by Professor Kuritzky during the Spring '10 term at Webster.

Page1 / 3

Week 3 HW - The percentage return is $100/$1,000 = 0.10 =...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online