FIN 500 Saudi Electronic University Measurement of Risk and Return in Investing Excel
FIN 500 Saudi Electronic University Measurement of Risk and Return in Investing Excel
Measurement of Risk and Return in Investing
*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit, no hard keys.
Problem 6-1: Standard Deviation
Given the following probabilities and returns, for MKS, Inc., find the standard deviation.
DATA
Probability
Return
0.40
7%
0.25
4%
0.15
18%
0.20
10%
Problem 6- 2 Holding-Period Period Return
From the price data below, compute the holding-period returns for periods 2 through 4.
DATA
TIME
STOCK PRICE (SAR)
1
10
2
13
3
11
4
15
Problem 6-3: Holding-Period Gain SAR and Return
Suppose you purchased 16 shares of DCI stock for 24.22 SAR per share on May 1, 2016. On September 1 of the same year, you sold 12 shares of the stock for 25.68 SAR per share. Calculate the holding-period dollar gain for the shares you sold, assuming no dividend was distributed, and calculate the holding-period rate of return.
Problem 6-4: Capital Asset Pricing Model
Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 5 percent and the expected return for the market is 12 percent.
StockBeta
A.75
B.90
C1.40
Problem 6-5: Security Market Line
A. Determine the expected return and beta for the following portfolio:
DATA
Stock
% of Portfolio
Beta
Expected Return
1
40%
1.00
12%
2
25%
0.75
11%
3
35%
1.30
15%
Problem 6-6: Required Rate of Return using CAPM
a. Compute an appropriate rate of return for ABC common stock, which has a beta of 1.2. The risk-free rate is 2 percent, and the market portfolio has an expected return of 11 percent.
b. Why is the rate you computed an appropriate rate?
Problem 6-7: Expected Return, Standard Deviation
Below are the historical prices for Citigroup and the S&P500 Index. Calculate the average monthly returns and the standard deviation for each.
DATA
Month
Adidas
S&P 500
Stock Prices
Index
May-14
47.57
1924
June-14
47.10
1960
July-14
48.91
1931
August-14
51.65
2003
September-14
51.82
1972
October-14
53.53
2018
November-14
53.97
2068
December-14
54.11
2059
January-15
46.95
1995
February-15
52.42
2105
March-15
51.52
2068
April-15
53.32
2086
May-15
54.97
21282 attachmentsSlide 1 of 2
UNFORMATTED ATTACHMENT PREVIEW
Module 6 Critical Thinking Assignment: Measurement of Risk and Return in Investing *Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit, no hard keys. Problem 6-1: Standard Deviation Given the following probabilities and returns, for MKS, Inc., find the standard deviation. DATA Probability 0.40 0.25 0.15 0.20 Return 7% 4% 18% 10% Problem 6- 2 Holding-Period Period Return From the price data below, compute the holding-period returns for periods 2 through 4. DATA TIME 1 2 3 4 STOCK PRICE (SAR) 10 13 11 15 Problem 6-3: Holding-Period Gain SAR and Return Suppose you purchased 16 shares of DCI stock for 24.22 SAR per share on May 1, 2016. On September 1 of the same year, you sold 12 shares of the stock for 25.68 SAR per share. Calculate the holding-period dollar gain for the shares you sold, assuming n
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FIN 500 Saudi Electronic University Measurement of Risk and Return in Investing Excel
Measurement of Risk and Return in Investing
*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit, no hard keys.
Problem 6-1: Standard Deviation
Given the following probabilities and returns, for MKS, Inc., find the standard deviation.
DATA
Probability
Return
0.40
7%
0.25
4%
0.15
18%
0.20
10%
Problem 6- 2 Holding-Period Period Return
From the price data below, compute the holding-period returns for periods 2 through 4.
DATA
TIME
STOCK PRICE (SAR)
1
10
2
13
3
11
4
15
Problem 6-3: Holding-Period Gain SAR and Return
Suppose you purchased 16 shares of DCI stock for 24.22 SAR per share on May 1, 2016. On September 1 of the same year, you sold 12 shares of the stock for 25.68 SAR per share. Calculate the holding-period dollar gain for the shares you sold, assuming no dividend was distributed, and calculate the holding-period rate of return.
Problem 6-4: Capital Asset Pricing Model
Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 5 percent and the expected return for the market is 12 percent.
StockBeta
A.75
B.90
C1.40
Problem 6-5: Security Market Line
A. Determine the expected return and beta for the following portfolio:
DATA
Stock
% of Portfolio
Beta
Expected Return
1
40%
1.00
12%
2
25%
0.75
11%
3
35%
1.30
15%
Problem 6-6: Required Rate of Return using CAPM
a. Compute an appropriate rate of return for ABC common stock, which has a beta of 1.2. The risk-free rate is 2 percent, and the market portfolio has an expected return of 11 percent.
b. Why is the rate you computed an appropriate rate?
Problem 6-7: Expected Return, Standard Deviation
Below are the historical prices for Citigroup and the S&P500 Index. Calculate the average monthly returns and the standard deviation for each.
DATA
Month
Adidas
S&P 500
Stock Prices
Index
May-14
47.57
1924
June-14
47.10
1960
July-14
48.91
1931
August-14
51.65
2003
September-14
51.82
1972
October-14
53.53
2018
November-14
53.97
2068
December-14
54.11
2059
January-15
46.95
1995
February-15
52.42
2105
March-15
51.52
2068
April-15
53.32
2086
May-15
54.97
21282 attachmentsSlide 1 of 2
UNFORMATTED ATTACHMENT PREVIEW
Module 6 Critical Thinking Assignment: Measurement of Risk and Return in Investing *Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit, no hard keys. Problem 6-1: Standard Deviation Given the following probabilities and returns, for MKS, Inc., find the standard deviation. DATA Probability 0.40 0.25 0.15 0.20 Return 7% 4% 18% 10% Problem 6- 2 Holding-Period Period Return From the price data below, compute the holding-period returns for periods 2 through 4. DATA TIME 1 2 3 4 STOCK PRICE (SAR) 10 13 11 15 Problem 6-3: Holding-Period Gain SAR and Return Suppose you purchased 16 shares of DCI stock for 24.22 SAR per share on May 1, 2016. On September 1 of the same year, you sold 12 shares of the stock for 25.68 SAR per share. Calculate the holding-period dollar gain for the shares you sold, assuming n
Do you similar assignment and would want someone to complete it for you? Click on the ORDER NOW option to get instant services at LindasHelp.com