# 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

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

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

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