HOMEWORK

Instructions

Submit only ONE Word document that is typed for this assignment. I will not accept assignments that are hand written. You must copy and paste-special relevant tables from your excel spreadsheet to support your answer in the document file. Points will be deducted if you upload an excel file in your submission and if you only give the final answer without showing your working regardless of giving the correct answer.

1A) You have the opportunity to purchase the Daytona Tortugas or the USSSA Pride. The franchises will cost the same to buy. The probability distributions of your expected returns for the franchises are as follows:

Daytona Tortugas

1. What is the expected return for the Tortugas? (3 points)

2. What is the standard deviation of the Tortugas? (3 points)

3. What is the coefficient of variation for Tortugas? (3 points)

COPY AND PASTE HERE THE RELEVANT TABLE FROM YOUR EXCEL FILE TO SUPPORT YOUR PREVIOUS ANSWERS (a), b), and c)).

USSSA Pride

4. What is the expected return for the Pride? (3 points)

5. What is the standard deviation of the Pride? (3 points)

6. What is the coefficient of variation for Pride? (3 points)

COPY AND PASTE HERE THE RELEVANT TABLE FROM YOUR EXCEL FILE TO SUPPORT YOUR PREVIOUS ANSWERS (d), e), and f)).

7. Which franchise would you invest in? Explain your answer. (3 points)

1B) Jackson Sports Holdings has a total investment of $500 million in four companies:

1. What is the expected rate of return for the portfolio? (4 points)

COPY AND PASTE HERE THE RELEVANT TABLE FROM YOUR EXCEL FILE TO SUPPORT YOUR PREVIOUS ANSWER (a)).

2. The company is considering investing $200 million in Manchester United at a rate of return of 7.0%. Considering only the rate of return, would you advise them to invest in the company? Explain and show your working. Remember that the total investment increases as Manchester is now added to the portfolio. (4 points)

COPY AND PASTE HERE THE RELEVANT TABLE FROM YOUR EXCEL FILE TO SUPPORT YOUR PREVIOUS ANSWER (b)).

3. What is the overall (weighted average) beta of this portfolio (without Manchester United)? (4 points)

COPY AND PASTE HERE THE RELEVANT TABLE FROM YOUR EXCEL FILE TO SUPPORT YOUR PREVIOUS ANSWERS (C)).

4. Would you expect a rate of return above or below the average market return with this portfolio? Explain. (2 points)