9. Calculating Returns and Variability You've observed the following returns on Mary Ann Data Corporation's stock over the past five years: 216 percent, 21 percent, 4 percent, 16 percent, and 19 percent.
a. What was the arithmetic average return on Mary Ann's stock over this five-year period?
b. What was the variance of Mary Ann's returns over this period? The standard deviation?
10. Calculating Real Returns and Risk Premiums In Problem 9, suppose the average inflation rate over this period was 4.2 percent and the average T-bill rate over the period was 5.1 percent.
a. What was the average real return on Mary Ann's stock?
b. What was the average nominal risk premium on Mary Ann's stock?
5. Calculating Expected Return Based on the following information, calculate the expected return:
6. Calculating Returns and Standard Deviations Based on the following information, calculate the expected return and standard deviation for the two stocks:
Discuss an overview of the measures of returns on various financial assets, and the various measures of the risk associated with the same assets. Develop the concept of portfolio and provide measures of portfolio risk and return. Analyze beta as a measure of relative risk of the stock and the impact of diversification on measuring risk.
Discuss the applications of portfolio theory, the concept of time value of money on financial management analysis.
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The question set include problems in portfolio analysis and expectation theory
Finance : Expected Return and Risk
Emery, Finnerty & Stowe - Ch. 6, problems A6, B6, & B10 (a only)-
A6. (Expected portfolio return) Musumeci Capital Management has invested its portfolio as shown here. What is Musumeci's expected portfolio return?
B6. (Expected return and risk) Procter & Gamble is considering three possible capital investment projects. The projected returns depend on the future state of the economy as given here.
a. Calculate each project's expected return, variance, and standard deviation.
b. Rank the projects on the basis of (1) expected return and (2) risk. Which project would you choose?
B10. (Excel: Calculating means, standard deviations, covariance, and correlation) Given the probability distributions of returns for stock X and stock Y, compute:
a. the expected return for each stock, x and y hereView Full Posting Details