Finance questions
Not what you're looking for?
See Attachment.
You are given the following long-run annual rates of return for alternative investments:
U.S. Gov't T-bills 2.25%
Large-cap common stock 7.50%
Long-term corporate bonds 4.85%
Long-term Gov't bonds 4.35%
Small-capitalization common stock 9.50%
The annual rate of inflation is 1.25%. What is the real rate of return (hint: use formula on page 17)
The following are the monthly rates of return for ABC Corporation and XYZ Corporation (show work for partial credit):
Note: depending on your statistical approach (i.e. Excel formulas or table) I will provide credit assuming I can tell which approach was used.
Month ABC XYZ
1 0.03 0.01
2 0.05 0.025
3 0.01 0.03
4 -0.005 0.015
5 -0.025 -0.02
6 0.35 -0.01
a) what is the geometric mean monthly return for each stock (recall, the returns will need to be converted to non-negative numbers)
b) what is the standard deviation of returns for both (please note: if not using Excel's formula to arrive at Standard Deviation use n-1 in denominator)?
ABC
XYZ
c) what is the covariance between the rates of return (remember to use n-1 if deriving through a table)?
COV
d) what is the correlation coefficient between the rates of return?
e) would these two stock offer a good chance for diversification? Why or why not?
Compute the beta coefficient for General Electric
The following are the historic returns for Monte Company:
Year Monte Market index
1 23 9
2 5 9
3 -9 6
4 3 -5
5 12 12
6 9 13
a) what is the correlation coefficient between Monte and the Market Index?
b) what is the standard deviation for the company and the index?
c) what is the beta for Monte Company?
Purchase this Solution
Solution Summary
The solution explains some finance questions relating to real rate of return; beta coefficient for GE and Monte & Market Index
Purchase this Solution
Free BrainMass Quizzes
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations