You are the Director of Institutional Research at a small state university and you have been given
the task of gathering information for the Dean of the School of Education regarding the
performance of its undergraduate students on the Graduate Record Exa
An investor who does not follow the perception of an ordinary investor is a
contrarian investor. Contrarian investing is similar to value investing because contrarian
investors seek devalued and mispriced investments and purchase those shares that seem to
RETURNS
1
Annualized Returns
Brian J. Ayres
BUS 405: Principles of Investments
Dr. Jennifer Bolden
July 13, 2015
BUSINESS 405
Problem 27:
B=1-($1.60/$3.65)= 0.5616
G= 28 x 0.5616= 15.73%
K= 3.13%+ 0.6= 7.33%
P0 = -25.52
-25.52 = 1.6 (1+0.1573)2 / (0.0733-
One-Year STRIPS:
The steps are:
1. Find for Interest rates: cfw_1 + (.04144/2)4 = cfw_1 + (.03909/2)2
2. Calculate out your Forward Interest rate (1 + f 1,1) which gives you your EAR = 4.427%
3. Plug in your EAR percentage to obtain your one-year STRIPS o
BOOTSTRAPPING
1
Bootstrapping Problems
Brian J. Ayres
BUS 405: Principles of Investments
Dr. Jennifer Bolden
July 20, 2015
BOOTSTRAPPING
2
Bootstrapping Problems
P=C_1/(1+r_1 )+(C_2+Par value)/(1+r_2 )^2
Just know few steps, you can consider as a hint
$1,
The name used for present value when the cash flows are being valued from the
bond, is a bond price. But the interest rate followed in the real valuation of the cash flows
resultant from the bond, is the YTM.
If the coupon rate is more compared to the req
a. What is the expected return on a portfolio that is equally invested in the two assets? 6.50%
Stock Expected Return - 0.09
Beta
- 0.9
Bond Expected Return - 0.04
Beta
- 0.9
(0.09 + 0.04) / 2
0.065 (6.5%)
b. If a portfolio of the two assets has a beta of
a. Use the following information on states of the economy and stock returns to
calculate the expected return for Dingaling Telephone. 9.70%
State of
Probability of
Securit
Economy
State of the
y
Economy
Calculations
Stock
Return
Returns
if State
Recession
METRICS
1
Performance Metrics
Brian J. Ayres
BUS 405: Principles of Investments
Dr. Jennifer Bolden
July 26, 2015
METRICS
From the analysis above:
The Sharpe Ratio For Papa=0.41
For Mama=0.00540
Treynor's Ratio For Papa=5.148
For Mama=0.091
Jenson's alpha
I think Kenny should sell Treasury bond futures to hedge the impending bond issue
because; futures contracts are one of the most common derivatives used to hedge risk. Moreover,
the bond price declines in the market would be offset by a gain on the short
The new car lot is a primary market. The reason is that each brand-new car that is
sold is actually Initial Public Offering (IPO) meaning that the car is first hand without ever
being sold before. Whereas, the used car lot is a secondary market because th
Blumes formula is R(T)= (T-1)/(N-1)*Geometric Average + (N-T)/(N-1)* Arithmetic Average
The arithmetic and geometric returns mean (average) is utilized by Blumes formula to
compute and estimate an anticipated or upcoming return. It is extremely hard to es
$50,000/$1.00
Opening shares = 50,000
$50,000(.025) = $1,250
$50,000 + $1,250 = $51,250 Shares
NAV = $1.00, because it is always $1 for these money market shares.
For myself, I treat this kind of account as an alternate account to my other savings
account
WEEK ONE PROBLEMS
1
Investment Week One Problems
Brian J. Ayres
BUS 405: Principles of Investments
Instructor Phillip Sarakatsannis
October 11, 2015
WEEK ONE PROBLEMS
Purchasing stock and selling price is $48:
Shares purchases 28,000/40 = 700 Shares
Total
The covered put represents writing put options on the stock. This strategy is comparable
to a covered call because, in the case of a short sale, would be a decline in the stock price.
Therefore, the price is capped in exchange for the receipt of the optio
INVESTMENT
1
Investment Strategies
Brian J. Ayres
BUS 405: Principles of Investments
Instructor Phillip Sarakatsannis
November 8, 2015
INVESTMENT
2
Investment Strategies
Investment is subject market movements. Due diligence must be exercised while
taking
Running head: Week 5 Portfolio
1
Bootstrapping
Aaron Lathrop
BUS405 Principles of Investments
Instr. Dr. Bolden
8/02/2015
Running head: Week 5 Portfolio
2
The key to gaining financial success in their retirement years, is to begin preparing far
before the
1. BondPricesversusYields
CompleteConceptQuestion9ofChapter10:
a. What is the relationship between the price of a bond and its YTM?
The relationship between a bond price and its YTM is that the bond price is the present value
term when considering the va
1
Running head: PRINCIPLES OF INVESTMENTS
Annualized Returns Problem
BUS 405
1/11/2016
An investor has $28,000 to invest in Miller-Moore Equine Enterprises, which is currently
selling for $40 per share. There is a call option with a $40 strike price and s
1
Running head: PRINCIPLES OF INVESTMENTS
Abbott Laboratories
BUS 405
1/18/2016
Problem 27: What is the sustainable growth rate and required return for Abbott Laboratories?
Using these values, calculate the 2010 share price of Abbott Laboratories Industri
From Chapter 4, complete Problem 4: The Aqua Liquid Assets Money Market Mutual
Fund has a NAV of $1 per share. During the year, the assets held by this fund appreciated
by 2.5 percent. If you had invested $50,000 in this fund at the start of the year, how
You are getting yellow alerts all the time. There are external yellow alerts:
He keeps coming home later and later with alcohol on his breath. The clients first check
bounced.
He screamed at his secretary. His mother warned you. Your friends told you.
And
pauses An
appropriate pause can often do more to accent your message than any other
vocal character-istic. President Kennedys famous line, Ask not what your country can
do for you; ask what you can do for your country, was effective not only because of it
5. Answers to the fifth questionIf you have worked as a volunteer, do you plan to do
so again? Why or why not?were interesting. All the respondents indicated that
they planned to engage in volunteer work again, but most said they were not likely to
do so
To your niece: Imagine youre an oyster on the ocean floor. A grain of
sand gets inside your shell and makes you uncomfortable. So you
decide to cover it up. You cover it with a material called mother-ofpearl. The covering builds up around the grain of san