Question 1 Suppose the real rate is 2.02% and the nominal rate is 8.42%. Solve f

Question

Question 1

Suppose the real rate is 2.02% and the nominal rate is 8.42%. Solve for the inflation rate.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Answer

Question 2

A portfolio is invested 37.7% in Stock A, 26.6% in Stock B, and the remainder in Stock C. The expected returns are 19%, 26.1%, and 11.8% respectively. What is the portfolio's expected returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.

Answer

Question 3

You own a portfolio invested 13.68% in Stock A, 13.75% in Stock B, 25.3% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.87, 0.65, 0.89, and 1.39. What is the portfolio beta?

Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Answer

Question 4

You have observed the following returns on ABC's stocks over the last five years:

3.5%, 9.4%, -5.1%, 13.2%, -4.4%

What is the arithmetic average returns on the stock over this five-year period.

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Answer

Question 5

Suppose a stock had an initial price of $66.63 per share, paid a dividend of $9.1 per share during the year, and had an ending share price of $85.22. What are the percentage returns?

Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Explanation / Answer

1 )

(1 + interest) / (1 + inflation) - 1 = Real

(1 + 8.42) / (1 + inflation ) = 2.02 + 1 = 3.02

1 + inflation = 9.42 / 3.02

inflation = 2.12

2 ) E(p) = (0.377 *19) + (0.266*26.1) + (0.357 *11.8) = 18.32

3 )Portfolio beta = (weighting of A*Beta A) + (weighting of B*Beta B) + (weighting of C*Beta C)+ (weighting of D*Beta D)

= (0.1368*0.87) + (0.1375*0.65) + (0.253*0.89) + (0.4727*1.39)

= 1.09

4 ) ans = (3.5% + 9.4% -5.1% + 13.2% -4.4%) / 5 = 3.32

5 ) ans = [$9.1 + ($85.22-$66.63)] / $66.63

= [$9.1 + $18.59] / $66.63
= $27.69 / $66.63
= 0.42 = 42%

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.