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During the past five years, you owned two stocks that had the following annual rates of return: Year Stock A Stock B 2013 -12% -18%
- During the past five years, you owned two stocks that had the following annual rates of return:
Year | Stock A | Stock B |
2013 | -12% | -18% |
2014 | 18% | 23% |
2015 | 22% | 25% |
2016 | 28% | 22% |
2017 | -11% | 2% |
Required:
- Compute the arithmetic mean annual rate of return for each stock.
- Compute the standard deviation of the annual rate of return for each stock.
- Compute the coefficient of variation for each stock.
- Highlight four limitations of portfolio analysis.
- Ewert Company sells a Product P with sales occurring evenly throughout the year. The annual demand for Product P is 300,000 units and an order for new inventory is placed each month. Each order costs KES 40,000 to place. The cost of holding Product P in inventory is KES 15 per unit per year. Buffer (safety) inventory equal to 40% of one months sales is maintained.
Required:
Calculate the following values for Product P:
- The total cost of the current ordering policy.
- The total cost of an ordering policy using the economic order quantity.
- The net cost or saving of introducing an ordering policy using the economic order quantity.
- Highlight four limitations of the EOQ model.
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