Quiz_Chap09 Key
1. Which one of the following methods of project analysis is defined as computing the value of a project based upon the present value of the project's anticipated cash flows? A. constant dividend growth model B. discounted cash flow valuat
Finding a Minimum-Risk Portfolio
The example on the next page illustrates the calculations which underlie the
Capital Asset Pricing Model (CAPM).
There are three investment alternatives, and our goal is to find, for any
"target" expected rate of return, t
Editorial Board
Editor-in-Chief:
Michael G. Plummer
The Johns Hopkins University, School of Advanced International Studies, Bologna Center
Associate Editors:
R. Click, The Elliott School of International Affairs, The George Washington University, Washingt
Data
Portfolio Optimization
Earnings History
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Stock A Stock B
48.5%
22.4%
10.3%
29.0%
23.5%
21.5%
-5.5% -27.2%
-8.5%
14.5%
5.6%
10.7%
3.8%
32.1%
8.9%
30.5%
9.0%
19.5%
8.2%
39.0%
3.5%
-7.2%
17.6%
71.5%
Stock C
Course Code: FIN 441
Homework #2
Professor Shafiqur Rahman
1(a) uS = $25 + ($25 x 15%)
= $28.75
dS = $25 ($25 x 15%)
= $21.25
(b) Cu = uS - X
= $25(1.15) $25 = $3.75
Cd = dS - X
= $25(0.85) - $25 = $-3.75, 0
(c) p = (1 + r d) / (u d)
= (1.10 0.85) / (1.15
Introduction
This spreadsheet does MPT unconstrained portfolio optimization calculations for the two, three
Warning
Using MPT for real-life portfolio construction can be hazardous to your wealth.
The purpose of these spreadsheets is to learn about the MPT