Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are an investor and invest in stock FRIL and NFLL. Stock FRLL didn't pay the dividend while stock NFLL paid dividend frequently. You are

image text in transcribed

You are an investor and invest in stock FRIL and NFLL. Stock FRLL didn't pay the dividend while stock NFLL paid dividend frequently. You are given price of stock FRLL and NFLL for the last 4 years: Price (in Rp) Year NFLL Stock FRLL Stock NFLL Stock Dividend 2017 1000 1000 2018 1500 1000 100 2019 1200 1000 150 2020 1350 1000 200 a. Calculate arithmetic average return and geometric average return from 2017-2020. b. In 2020, you invest Rp 100 million in stock FRLL and Rp180 million in stock NFLL. You have probabilities for recession 35%, normal 50%, and boom 15%. Under crisis circumstances, you expect the return will be 5% lower than the retum in normal condition, while under boom circumstance the return will be5% higher than return in normal condition. Calculate the expected retum and standard deviation for stock FRLL and NFLL, also find the expected return for the portfolio c. As an investor, which stock do you prefer and why? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance

Authors: Ehsan Nikbakht, A A Groppelli

6th Edition

0764147595, 9780764147593

More Books

Students also viewed these Finance questions

Question

Utilizing the servuction model, describe your classroom experience.

Answered: 1 week ago