Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
Beta Management Company Summary

Beta Management Company Summary

|Views: 3,390|Likes:
Published by sabohi

More info:

Published by: sabohi on Sep 24, 2010
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as DOCX, PDF, TXT or read online from Scribd
See more
See less





[Type text] Page 1
Beta Management
Beta Management Company is a small investment management company. They hadapproximately 25 million dollars when they started in 1991. Their company goal is to enhancereturns but reduce risks for clients via market timing. Initially Beta¶s funds were invested intothe Vanguard 500, an S&P 500 no-load and low-expense index funds (with the remainder inmoney market instruments). The founder and CEO, Sarah Wolfe, adjusted the level of marketexposure from 50-99% of the fund. She tried to ³time the market´ and reduce exposure to themarket by decreasing the percent of the investment that was allocated to the Vanguard 500 index.When the market was about to go on an upswing they would invest more heavily in the indexfunds. Beta¶s performance was tied to Ms Wolfe¶s ability to predict the market. By 1991, MsWolfe decided it was time to invest in individual stocks of smaller companies. Based onrecommendations from stock market analysts they recommended that she take a look atCalifornia REIT and Brown Group. She hired two analysts for that purpose. California R.E.I.T¶sstock price closed at $ 2
per share and Brown Group, Inc.¶s price is $24. A $200,000 purchaseof one of these stocks would increase her total equity exposure to $20 million. Still, she hadsome doubts but she promised her clients of reasonable returns.
[Type text] Page 2
Calculate the variability or Standard Deviation of the stock returns of California Reit andBrown group during past two years, how variable they are in comparison with the Vinegar 500index trust fund?
monthVanguard Index 500trustCaliforniaREITBrownGroup
1989- jan 7.32% -28.26% 9.16%1989-feb -2.47% -3.03% 0.73%1989-mar 2.26% 8.75% -0.29%1989-apr 5.18% -1.47% 2.21%1989-may 4.04% -1.49% -1.08%1989- jun -0.59% -9.09% -0.65%1989- july 9.01% 10.67% 2.22%1989-aug 1.86% -9.38% 0.00%1989-sep -0.40% 10.34% 1.88%1989-oct -2.34% -14.38% -7.55%1989-nov 2.04% -14.81% -12.84%1989-dec 2.38% -4.35% -1.70%1990- jan -6.72% -5.45% -15.21%1990-feb 1.27% 5.00% 7.61%
[Type text] Page 3
The variability of both California REIT and Brown Group is double as compare to the Vanguard 500 IndexTrust.
According to the calculation we have found the following information:Stock Vanguards Index California Reit Brown GroupStandard deviation
After making the comparison we have found that the Stock California Reit is more risky thanBrown Group because the standard deviation of that group is more than the brown group so
1990-mar 2.61% 9.52% 1.11%1990-apr -2.50% -0.87% -0.51%1990-may 9.69% 0.00% 12.71%1990- jun -0.69% 4.55% 3.32%1990- july -0.32% 3.48% 3.17%1990-aug -9.03% 0.00% -14.72%1990-sep -4.89% -13.04% -1.91%1990-oct -0.41% 0.00% -12.50%1990-nov 6.44% 1.50% 17.26%1990-dec 2.72% -2.56% -8.53%S.D

Activity (14)

You've already reviewed this. Edit your review.
1 hundred reads
1 thousand reads
Varun Rastogi liked this
Jessel Quirequire liked this
Praveen Kumar liked this
Chao Ma liked this
Malika Francis liked this
Pablo Cuaron liked this
Chao Ma liked this
Joseph Lu liked this

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->