: Ss MOESTyES: fala St ee ——— TT ato jit XT i v C=) *puieg, | cateutatin of ithe teat of nen cammon advole Cor (ntzs = nal peste) (Ke), Kp Ds. go np” =F 4 a ty 14.0 =O: 249 % 90219 G- tL Scanned with CamScanner"le. 5) Foren, Cutie lhe tock tf Kise bo_stock A lad the tock of vel be atook 6. = fet_stackA ‘Tp = 147. 6p = 59. = f= atock 3 Ba - 1696 CR =94 QI celution Mp = 0+ 30 2B = 0:90 By =? Earpe oftal achutn_om pestfalin (Fp) ~ lp» Be + Log x%, =O: 80 x44 0-90 vith = 16 9. _ Tica ation (Pao 2 =t10. LObd » 2 ? b= Alton! v & tliat y Cate py Wp x log xan v 6a XB ft 2 fe nlco- 90)" x/5)2 + (06 90)" x (a) v0: 30 x: 90 y 4 5x Scanned with CamScannercatesialing the expechdl Ada of this _protfolia ley = afisatx 6p2t lope x 6R2 49 bop xUB X fan x 6 * £2 = N/0- 30)2x (5) 24/0» 90)? x (9) "4 2y 0+ 80x D+ 9) x=D-1 ¥ Sxg = up. 05 = 6+ 33 Fo Scanned with CamScannerE4BIT / NOs Ko NP SLY Scanned with CamScannerAe we = [arp nor) - DU- 2) = [(2000000) - (59 v Goooovn)) x (4-0) = fa. 19,00,000 nweLs & NE S = 1900 00D 14,0DD, ODD O: 121 ot 19-14 9» ty) Caleubatin alt: meguity, Adtip, eae ip Met = bobo0ov 14, DDD, ODD = 0 UP8E of 42-86 I~ (AD HL the be fp. aata froma Ls_€ millim to 10 million, Value of debt (B) = fd 10 rislliin . ——_ |! Sng fim cw Vi. £297 2000,000 = k4 20,0 :00,0BD Ko 0-10 Scanned with CamScannerNE oly rr -f)Jti-1) C2000, -(59-y 10,000 150, Scanned with CamScannerScanned with CamScannerScanned with CamScanner* S2vbion, ® = \g0000 Porehne prwe = 2 Posy a = SO OFD ager = Heme © = Rs uow S& = Ison Coad @ lactase Woe = dwoeck: Row, ae Pea. = SS : Bo 166600 x MOD re = Wem units. b. Nunve evden, 7A _ ~ OR wo c. Re ovder leva = aA ox Owen eee copromptton — G42 T \Soro + (> \go0000) ~ o So " \Sooe 4 $600 \S6ono unite, vl amt | So " OF = et SSweek> Since OF > LT , how & NO GIT 1 Scanned with CamScanner8 Sorvhion. Pree, Reece TIN TE SSH ete * SHe Ree 2 er Seen 297 News, Rye WR Broce 1% Pree OB IM. FORK 1G Wr AND su, TE Covelation +L P= PM vee, woce Sete Tmise Sead = = FOVpee , Huse SHO COVece, twee s US « ee Sa Te =) We Teer A WaEZ F 2 COVecepese WO = \O09% 2S t ONGx 8] 4 DUS XOBROD Easy STEST Ea - Br 78. Ie cotvdaton =-1 , Cov « -YUS Sp (aa werey 4-3 Scanned with CamScannerGxeup B. Daven cust yf OMeuiah (i) = 109» #2 Lasjech A NCO = 10. )00 dear CE cumulative CEAT 4 6000 6000 2 2500 9500 3 500 18000 4 4000 44 000_. a Adeae 4 LA'S CFA =e + 500 3500 = Po 1y Yshast des Neb Prercnf Value vem CE PVIF@ 109. PV 000 H SU 5G & 2500 ; 3500 = 4000 623 TY 2 11659°55 = 474660 Scanned with CamScanner| NOL, [Wee Pacatr? Value (Mu). PPV = Wer. 1 = 44, 660 - 10 p00 = 4. 1,660 jit Jot Ditecnal Late of Retusn (O02) cobeulating fale facies Fake factes = NCO Aiwrage CFAT = 40, 00 $500 = 2 RE Aefessing to Pv ifa table pt yeas. the fackes Loko — b Je and 15"Fe Cie 29139 and ibs inY Behiooen 14 2 $550) coloulating hack Pasatn? Value Of Ante 199° and 209, yy af 19 9° ws C. PVIE@ 1996 Py 4 6000 O- 8403 Sou & 2 3500 O02 9062 2u94 oD 3 3500 0+ 5934 2096-9 ¢ 1000 024982 U GR Teves 10089 es Scanned with CamScannerNPV = TPv - NCO = {0089-4 - 40000 = Ra 89-4 bain hy Gt 20 Ge ena CE PUSE@ 10 4 pv 4 6000 028333 4999-8 2 3500 O+ Guy 4 202 3 3.500 D- 5989 2025+ U5 4 4000 Oe Yep 489.3 Tpv + 9939-95 NPV_= FTPV- NCO = fal 9939- 95 - 10,000) =(ks 69-05) DMs ng 2 D RR — 2 4 NVae ip UR-LR) NPV a 12 ~ NPVas we = 40 89e4 2, 9) 190-1 [= ag) = _ 19> 589y Jo Scanned with CamScannerhupv) Vs NPV) = TPV- Ne CFAT PVElA @ 104. PU 8500 3° 1699 1 . Tpv = 11095 neo * C10000) v= 41095 Scanned with CamScanner= 2+ 86 yeti Kifedat note PVSLa table at YW yeh aT! Lactes 0 ca. hte lies Menwen Au pnd 159+ Lie 2 o18 2 2: B55) Cabealating NPV af 14 90 and 159- Mens || CEar vite sya» PY. PULLA OSD. ey _U-W) 00 22.39 10192 Do 550 9995 NLbo NPV, = 97pv-_Nco = 104198- 190nD = hy 198 NPViug = TPV - NCO = 9993 - Joop = (de 9) caladating LLL. ty intbotatin Method IRR. , NPVase tL Hep NP Vat Le ~ NPV of He = AL 19.8 tt oe pay Ot = 14-99 fe Scanned with CamScanner(by the At Lodenondont-, bth, pupiect A and pegiecl Base avbrotzd "Because both bisa bar live py Aod 1 $a Ate, than A use a Aake (cy y thi. papyect, Ase thusatly exoluaive, Luojeck Ais woolectec! a Gi bad forse% PRP than ppje At B (A) _Ainoe £0 , 2 fn not naib Valus P th jects 1 uohen a thes a, 2 ilo noe oe that tore int b pang Be Wweon NPV and Le danking Lo fad nuk wt iclintitiy the panfliob we need to caleulate Oy af 549. | fet Rawiook A Yaw 9 OF Pui @ py 4 6000. 0+ 9594 SO te ly 2 3600 De $090 19-405 3 3500 0+ R638 8028.3 "a 1000 OQ: R229. 822.9 PPV 8 19935 o" MPV = TPU- NCO = 12935 - 40 00D = 2935 . Scanned with CamScannerScanned with CamScanneri Caleulte expected retumand gag x % Calculate expected retum and & Calculate the coeficient of vans d. Is it possible that most 4 Stock X? Explain lard dey ‘ation of feturns eviation of returns m9 tion of fetums OM Stock X ay 9 Might regard land, on Stock X On Stock ¥, ind Y. Sock Y as being tess risky than NVestoy {, I you form a portfotio comp what are the expected nied Pt Sock x — Ef p 02 7 ve 2% a eo tf SS . f 8 2 04 3 8 E (Ra) = 12% = “Z_ Expected retum on Stock EQ) = ER Row Standard deviation of retu 20% 'ms on Stock X, (oy) « WEIR E(RDP. Pe VTE = b._Calculation of expected retum and standar id deviation for Stock Y Probability (P) Rr PrRr 4% 204 02 0 00 ~14 32 oa 2 80 6 Ma 02 % 50 1" 22 o4 65 45 3 St ER + Expected return on Stock Y, E(Rh) = EP, Ry = 195 —— Standard deviation of retums on Stock ¥, (oy) = VHIRy=ER Pe aa = 2035% & Calculation of coefficient of variation for Stock X and Stock ¥ For StockX For Stock Y ox 1220 oy Wx EaRg 7 ae MCW" Ba) Te 7145 Summary of risk and return Assets Expected Retum Slandard Deviation Coefficient of Variation ‘Sock X 12% 22% 102 Stock 4 2035 145 r standard No, Stock ¥ cannot be considered less risky than Stock X because both stan deviation and coefficient of variation of Stock Y are higher than that of Stock X. NJ Scanned with CamScannerow, = 05 pr “ayoy 12.20% {.Calealation of expected sur on the portfolio comprising 80 percen and 20 percent Stock Y ty EQ) 7% E(Re) + #y ERY) cog x 12% +02* H% "96% 428% = 124% Calculation of standard deviation ofthe portfolio comprising 80 perso and 20 percent Stock Y 3+ Que wy oy = Vos} (48. 8) + (0.2) (414) + (2) (08) (0.2) (734) = v 186.67 = 13.66% 2 of9525 + 1656 * 7488 Fave the following historical returns: Stock A ‘and Stock B = Returns, Ra Returms, Ra ‘Year 210 15.00% 800% noi 185 2 nw 3867 4s 2013 1433 56 23 20 335 Taam for each stock during the period 201082 F Calculate the average rate of aid, Assume that someone held a portfolio consisting ‘of 50 percent oft and 50 percent of Stock B. What would have been the realized rate of rt ® the portfolio in each year from 2010 through 2014? What would have feet average etur on the portfolio during this period? Now calculate the standard deviation of returns for 3c fort th stock and iuttt portfolio. o Looking at the annual returns data on the two stocks, correlation coefficient between retums on the two stocks is closer’ d. Ifyou added more stocks at random to the portfolio, which of the ‘most accurate statement of what would happen to Gp ? i a deviation of the portfolio (6p) would remain: i. Standard deviation of the portfolio (op) would declin vicinity of 15 percent. iii, Standard deviation of the ji Suniel devs portfolio (g,) would decline would you goes to 0.908 followire i constant. ¥ 1e to ‘somewhere to zero it enou8 Scanned with CamScannerTacenos\| pare: 1 oe [Av L f gl Le) PASAT [Rx | Pha | Ra Moe) [Rv 2h [xh folie | As 3] oe a. We 19 20 \ od Z. bu] = toe | Looe mS. (4 el Negi. 1-03 a (oe q5 Lite 964 ollme Ts. 69 i [2o | Cepited Vhom boda y = 2P% : = $]/2- pe P [tv 24a) : \ = J ahd « er ee 4 Tey ef L Waa, | Pe [UR yn thy ol VY pes) [epee] ok. 9% 62.524 ba ov sf FF 2b SK-bUT 0.5 18 4 qe | ae ay on w 10 (Le | 4-294 | 7h TS (Er. tat ota, Scanned with CamScannerED ao rs Ho 2) ae a Bho : We bag = (Mp6 U4 TT = ais Ley Sr Nae Scanned with CamScannerBB el teF. 7a ee Cpa Athand ond 6.0 SS ae so. ye LEX 13-9 = — = ~ ~ ~ = re af we ee me rye wy xX £2 Ky ws ay co — e — any eee ¥ xX tbo Fee “X14. 606 +2 0.50. a 64h Se Scanned with CamScanner