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Please do asap Mr. Nitin Gupta had invested Rs.8 million each in Ashok Exports and Biswas Industries and Rs. 4million in Cinderella Fashions, only a
Please do asap
Mr. Nitin Gupta had invested Rs.8 million each in Ashok Exports and Biswas Industries and Rs. 4million in Cinderella Fashions, only a week before his untimely demise. As per his will this portfolio of stocks were to be inherited by his wife alone. As the partition among the family members had to wait for one year as per the terins of the will, the portfolio of shares had to be maintained as they were for the time being. The will had stipulated that the job of administering the estate for the benefit of the beneficiaries and partitioning it in due course was to be done by the reputed firm of Chartered Accountants, ABC Company Ltd. Meanwhile the widow of the deceased was very eager to know certain details of the securities and had asked the senior partner of ABC Company Ltd to brief her in this regard. For this purpose the senior partner has asked you to prepare a detailed note to him with calculations using CAPM, to answer the following possible doubt. What is the expected return and risk (standard deviation) of the portfolio? You find that out the three stocks, your firm has already been tracking two viz. Ashok Exports (A) and Biswas Industries (B)-their betas being 1.7 and 0.8 respectively. Further, you have obtained the following historical data on the returns of Cinderella Fashions(C): Period Market Return % Return's on Cinderella Fashions % 1 14 2 10 5 (2) (1) 3 8 (6) 4 4 5 5 10 6 8 11 7 10 15 Mr. Nitin Gupta had invested Rs.8 million each in Ashok Exports and Biswas Industries and Rs. 4million in Cinderella Fashions, only a week before his untimely demise. As per his will this portfolio of stocks were to be inherited by his wife alone. As the partition among the family members had to wait for one year as per the terins of the will, the portfolio of shares had to be maintained as they were for the time being. The will had stipulated that the job of administering the estate for the benefit of the beneficiaries and partitioning it in due course was to be done by the reputed firm of Chartered Accountants, ABC Company Ltd. Meanwhile the widow of the deceased was very eager to know certain details of the securities and had asked the senior partner of ABC Company Ltd to brief her in this regard. For this purpose the senior partner has asked you to prepare a detailed note to him with calculations using CAPM, to answer the following possible doubt. What is the expected return and risk (standard deviation) of the portfolio? You find that out the three stocks, your firm has already been tracking two viz. Ashok Exports (A) and Biswas Industries (B)-their betas being 1.7 and 0.8 respectively. Further, you have obtained the following historical data on the returns of Cinderella Fashions(C): Period Market Return % Return's on Cinderella Fashions % 1 14 2 10 5 (2) (1) 3 8 (6) 4 4 5 5 10 6 8 11 7 10 15Step by Step Solution
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