Ask a question from expert

Ask now

Assignment on Investment Analysis & Portfolio Management.

5 Pages592 Words163 Views
   

Added on  2020-02-24

Assignment on Investment Analysis & Portfolio Management.

   Added on 2020-02-24

BookmarkShareRelated Documents
Investment Analysis &Portfolio ManagementSTUDENT ID:[Pick the date]
Assignment on Investment Analysis & Portfolio Management._1
Investment Analysis & Portfolio ManagementA.In order to compute the expected returns, the expected selling price needs to be determinedbased on probabilistic outcomes highlighted.Expected selling price = 0.6*11 + (1-0.6)*12 = K11.4Dividend income during holding period = K2Buying price of the stock = K10Hence, expected holding period returns = [(11.4+2-10)/10]*100 = 34 %B.In order to compute the standard deviation of returns for the stock, the returns in case of both the possible prices need to be computed.Returns (Selling price = K11) = [(11+2-10)/10]*100 = 30%Returns (Selling price = K12) = [(12+2-10)/10]*100 = 40%Expected returns = 30*0.6 + 40*0.4 = 34% The standard deviation of the stock can be estimated using the following table (Damodaran, 2010).From the above, it is apparent that the standard deviation of the given stock is 24%C.Coefficient of Variation = Standard Deviation/Mean = 24/34 = 0.706It is apparent that the coefficient of variation is moderate to high as standard deviation standsat 70.6% of the mean value. This implies that the given stock would be termed as moderateto high risk considering the fluctuations in stock price (Brealey and Myers, 2007).
Assignment on Investment Analysis & Portfolio Management._2

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
ACC00716 Finance : Assignment
|4
|674
|45

Corporate Finance Assignment Solved (Doc)
|5
|770
|53

Corporate Finance Assignment PDF
|5
|903
|22

Assignment on Corporate Finance PDF
|6
|902
|44

Corporate Finance: SML and CML line, Minimum Variance Portfolio, CAPM Equation
|12
|2742
|285

Modern Portfolio Theory and Risk Management in Finance
|5
|884
|53