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E F H A B C D F G Question 5 (5 Marks) 2 Refer to Questions 1 and 2. Richard has just received an unexpected 3 bonus at work worth $17,500 and, given the J. Corp.'s reputation 4 for excellent investment decision making, he will invest all of the bonus 5 in J Corp. stock. Given the rates of return for stocks A, B, C, and D 6 presented in Question 1 and the rates of return for J Corp. stock and 7 the market presented in Question 2, as well as the cash amounts he 8 is investing in stocks A, B, C, and D as you determined in Question 1, 9 10 a) What is the beta of Richard's portfolio? (3 Marks) Enter Ansi 11 (round to two decimal points) 12 13 b) Richard's portfolio is... (2 Mark) Aggressive 14 Defensive 15 Neither 16 1 17 Enter your Final Ans 18 Complete your rough work in the space below 19 20 21 22 23 24 25 26 27 28 29 30 A Title Page A Question 1 Question 2 Question 3 Question 4 Question 5 Ready B D E F Richard must decide how to allocate the capital in his portfolio. Richard has $70,000 available to invest. He finds the rates of return for four stocks for the past 12 years and the results are given below. Richard plans to invest 25% of his funds in each stock. a) How much will he invest in each stock? (1 Mark) b) The expected return of Richard's porfolio is: 02 Marks) Round your answer to one one-hundreth of a percent) 1 c) The standard deviation of Richard's portfolio return is: 2 (1 Mark)(Round your answer to one one-hundredth of a percent) 3 4 Year 5 6 2 7 3 8 4 9 5 6 7 2 8 9 24 10 25 11 26 12 27 28 29 30 31 32 Stock A (%) 6.140 11.820 13.320 8.320 -10.740 16 250 26.300 13.720 10.460 12.820 -4.180 2.740 Stock B (%) -19.990 33.890 38.390 23.390 -33.790 47 180 77.330 39.590 29.810 36.890 14.110 -9.790 Stock C (%) 5.600 -8.768 -9.968 -5.968 9.280 -12.312 -20.352 -10.288 7.680 -9.568 4.032 2.880 Stock D (%) -2.720 6.260 7.010 4.510 -5.020 8.475 13.500 7210 5.580 6.760 -1.740 1,020 Complete yo 2 Anna is a Vice President at the J Corporation. The company is considering 3 investing in a new factory and Anna must decide whether it is a feasible 4 project. In order to assess the viability of the project, Anna must first calculate 5 the rate of return that equity holders expect from the company stock. The 6 annual returns for J Corp. and for a market index are given below. Currently, 7 the risk-free rate of return is 2.2% and the market risk-premium is 4.6% 8 9 a) What is the beta of J Corp.'s stock? 10 (1 MarkX(Round your answer to two decimal places) b) Using the CAPM model, what is the expected rate of return on J Corp. stock for the 11 coming year? 12 (2 Marks/Round your answer to one one-hundreth of a percent) J Corp Market Retum (%) Return (%) -5.03 13 14 15 16 Year 1 2 3 4 5 6 7 17 18 19 20 21 22 23 24 25 26 27 28 9.34 10.54 6.54 -8.71 12.88 20.92 10.86 8.25 10.14 -3.46 -2.31 -6.80 11.16 12.66 7.66 -11.40 15.59 25.64 13.06 9.80 12.16 -4.84 -3.40 9 10 11 12 Complete your rough work in the space below Title Page Question 1 Quostion 2 Question 3 Question 4 Question 5 E F H A B C D F G Question 5 (5 Marks) 2 Refer to Questions 1 and 2. Richard has just received an unexpected 3 bonus at work worth $17,500 and, given the J. Corp.'s reputation 4 for excellent investment decision making, he will invest all of the bonus 5 in J Corp. stock. Given the rates of return for stocks A, B, C, and D 6 presented in Question 1 and the rates of return for J Corp. stock and 7 the market presented in Question 2, as well as the cash amounts he 8 is investing in stocks A, B, C, and D as you determined in Question 1, 9 10 a) What is the beta of Richard's portfolio? (3 Marks) Enter Ansi 11 (round to two decimal points) 12 13 b) Richard's portfolio is... (2 Mark) Aggressive 14 Defensive 15 Neither 16 1 17 Enter your Final Ans 18 Complete your rough work in the space below 19 20 21 22 23 24 25 26 27 28 29 30 A Title Page A Question 1 Question 2 Question 3 Question 4 Question 5 Ready B D E F Richard must decide how to allocate the capital in his portfolio. Richard has $70,000 available to invest. He finds the rates of return for four stocks for the past 12 years and the results are given below. Richard plans to invest 25% of his funds in each stock. a) How much will he invest in each stock? (1 Mark) b) The expected return of Richard's porfolio is: 02 Marks) Round your answer to one one-hundreth of a percent) 1 c) The standard deviation of Richard's portfolio return is: 2 (1 Mark)(Round your answer to one one-hundredth of a percent) 3 4 Year 5 6 2 7 3 8 4 9 5 6 7 2 8 9 24 10 25 11 26 12 27 28 29 30 31 32 Stock A (%) 6.140 11.820 13.320 8.320 -10.740 16 250 26.300 13.720 10.460 12.820 -4.180 2.740 Stock B (%) -19.990 33.890 38.390 23.390 -33.790 47 180 77.330 39.590 29.810 36.890 14.110 -9.790 Stock C (%) 5.600 -8.768 -9.968 -5.968 9.280 -12.312 -20.352 -10.288 7.680 -9.568 4.032 2.880 Stock D (%) -2.720 6.260 7.010 4.510 -5.020 8.475 13.500 7210 5.580 6.760 -1.740 1,020 Complete yo 2 Anna is a Vice President at the J Corporation. The company is considering 3 investing in a new factory and Anna must decide whether it is a feasible 4 project. In order to assess the viability of the project, Anna must first calculate 5 the rate of return that equity holders expect from the company stock. The 6 annual returns for J Corp. and for a market index are given below. Currently, 7 the risk-free rate of return is 2.2% and the market risk-premium is 4.6% 8 9 a) What is the beta of J Corp.'s stock? 10 (1 MarkX(Round your answer to two decimal places) b) Using the CAPM model, what is the expected rate of return on J Corp. stock for the 11 coming year? 12 (2 Marks/Round your answer to one one-hundreth of a percent) J Corp Market Retum (%) Return (%) -5.03 13 14 15 16 Year 1 2 3 4 5 6 7 17 18 19 20 21 22 23 24 25 26 27 28 9.34 10.54 6.54 -8.71 12.88 20.92 10.86 8.25 10.14 -3.46 -2.31 -6.80 11.16 12.66 7.66 -11.40 15.59 25.64 13.06 9.80 12.16 -4.84 -3.40 9 10 11 12 Complete your rough work in the space below Title Page Question 1 Quostion 2 Question 3 Question 4 Question 5
