Question
The Allied Group has acquired Kramer Industries and is now considering additional investments. They have determined that there is a firm that is a good
The Allied Group has acquired Kramer Industries and is now considering additional investments. They have determined that there is a firm that is a good fit for their portfolio, the Kramer firm of Montana. The firm was established in 1990 and has the following historical returns:
Kramer Industries | |
Year | Earnings |
1990 | (8% Loss) |
1995 | 23% |
2000 | 26% |
2005 | 31% |
2010 | 18% |
Address all of the following questions:
- What was the average return for the stock over the period of 1990 through 2010?
- What was the standard deviation for the stock over this period?
- Assume that you currently have a portfolio that returns 19.5%. Adding this stock to the current portfolio, what will happen to the average return on the portfolio?
- Should Allied invest in the stock? Why or why not
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Operations Management Creating Value Along the Supply Chain
Authors: Roberta S. Russell, Bernard W. Taylor
7th Edition
9781118139523, 0470525908, 1118139526, 978-0470525906
