The manager of Alpha Beta Funds is considering addition of the following stocks in his portfolio: a.
Question:
The manager of Alpha Beta Funds is considering addition of the following stocks in his portfolio:
a. Calculate the required rate of return for each stock.
b. Assume that the assistant to the manager, using fundamental analysis, develops estimates of expected rate of returns, labeled (Ri), for these stocks. Determine which stock(s) the manager of Alma Funds should include in hisportfolio.
Transcribed Image Text:
Stocks Standard Deviation Covariance Expected (R 180% 10% 20% 14% 10% 0.012 0.0075 0.011 0.0175 0.016 20% 12% 1400 16% 15% 1400 690 R- 0.9
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 58% (12 reviews)
tr msoheightsourceauto col msowidthsourceauto br msodataplacementsamecell style0 msonumberformatGeneral textaligngeneral verticalalignbottom whitespacenowrap msorotate0 msobackgroundsourceauto msopatt...View the full answer
Answered By
PALASH JHANWAR
I am a Chartered Accountant with AIR 45 in CA - IPCC. I am a Merit Holder ( B.Com ). The following is my educational details.
PLEASE ACCESS MY RESUME FROM THE FOLLOWING LINK: https://drive.google.com/file/d/1hYR1uch-ff6MRC_cDB07K6VqY9kQ3SFL/view?usp=sharing
3.80+
3+ Reviews
10+ Question Solved
Related Book For
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Question Posted:
Students also viewed these Accounting questions
-
Calculate the required rate of return for Campbell Corp. common stock. The stock has a beta of 1.3 and Campbell is considered a large capitalization stock. Current long-term government bonds are...
-
Calculate the required rate of return for Manning Enterprises assuming that investors expect a 3.5% rate of inflation in the future. The real risk-free rate is 2.5%, and the market risk premium is...
-
Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.6% rate of inflation in the future. The real risk-free rate is 1.0%, and the market risk premium is 6.0%....
-
Let Z[] be the following set of rational numbers { a Z, k N} (and recall that N = {0, 1, 2,...} in this class). Let the addition and multiplication for Z[] be the usual addition and multiplication...
-
In Section 9.3, the twos complement operation is defined as follows. To find the twos complement of X, take the Boolean complement of each bit of X, and then add 1. a. Show that the following is an...
-
One of your clients is considering electing S status. Texas, Inc., is a six-year-old manufacturing company with two equal shareholders, both of whom paid $30,000 for their stock. Going into 2022,...
-
Use the balance sheet equation to determine the missing values below. Common Assets Liabilities Stock Retained Earnings 320,000 150,000 45,000 ? ? 75,000 30,000 40,000 250,000 90,000 ? 120,000...
-
Natural gas that contains methane, ethane, and propane is to be burned with humid air. The adiabatic flame temperature is to be calculated from specified values of the following quantities: ycH 4 ,...
-
What type of payment works best for well - defined episodes such as surgeries or acute medical conditions, but does not work well for chronic conditions where the beginning and end of the episodes...
-
Marsha, Inc., has the following budgeted data for 2016: Cash balance, beginning..................................................15000 Collections from...
-
Loma, Inc. has an opportunity to purchase a new, more efficient press, Model T, to replace an old press, Model P, now in use. Loma's vice president in charge of purchasing has reported that the new...
-
In October 2012, Builtwell Construction Company executives were working on their budget for 2013. Builtwell expects to have the following book value capital structure on December 31, 2012: Debt...
-
Pepper Ltd. delivers 500 units of product to Salt Corp. The sales price was $125 per unit, and Peppers cost was $75 per unit. Pepper has agreed that Salt may return any unused product within 60 days...
-
If the confidence interval is change to a higher probability, would this cause a lower, or a higher, minimum sample size?
-
If the value of p is reduced, would this necessarily reduce the sample size needed?
-
A company has been running an assembly line with 97.42%% of the products made being acceptable. Then, a critical piece broke down. After the repairs the decision was made to see if the number of...
-
According to the N.Y. Times Almanac the mean family size in the U.S. is 3.18. A sample of a college math class resulted in the following family sizes: 5; 4; 5; 4; 4; 3; 6; 4; 3; 3; 5; 5; 6; 3; 3; 2;...
-
Find the first quartile for the sums. A uniform distribution has a minimum of six and a maximum of ten. A sample of 50 is taken.
-
Why would you think that technical analysis could not predict security prices over time?
-
The manager of a local convenience store is expanding his line of small toy items. To price these new items, the manager is looking at the prices being charged by competing retailers in his area. For...
-
Consider a mixture of CH4 and H2S at 444 K and 70 bar. Use the results of Example 7.4 to plot the fugacity coeffi cient of methane as a function of methane mole fraction using the van der Waals...
-
The following information is taken from the 2012 annual report of Bugant, Inc. Bugants fiscal year ends December 31 of each year. Bugants December 31, 2012, balance sheet is as follows. Bugant, Inc....
-
Wie Company has been operating for just 2 years, producing specialty golf equipment for women golfers. To date, the company has been able to finance its successful operations with investments from...
-
In this simulation, you are asked to address questions related to the accounting for long-term liabilities. Prepare responses to allparts. KWW Professional Simulation Long-Term Liabilities Time...
-
Suppose the average return on FTSE TMX Canada long-term bonds is 6.90% and the standard deviation is 8.10% and the average return and standard deviation on T-bills are 4.00% and 3.50%, respectively....
-
2 Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has the higher present value...
-
Compare two cloud accounting systems. From the information available on the company websites, how do their reporting capabilities differ? From your own accounting knowledge, what are some useful...
Study smarter with the SolutionInn App