Financial Information Data Gathering - Investor Risk Profile_updated (1)

PLEASE ANSWER ALL THE QUESTIONS Question 1  Fill the parts in the above table that are shaded in yellow. You will notice that there are nine line items.  Question 2  Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML)  b) Superimpose the CAPM’s required return on the SML  c) Indicate which investments will plot on, above and below the SML?  d) If an investment’s expected return (mean return) does not plot on the SML, what does it show? Identify undervalued/overvalued investments from the graph  Question 3  From the information generated in the previous two questions; a) Identify two investment alternatives that can be combined in a portfolio. Assume a 50-50 investment allocation in each investment alternative. b) Compute the expected return of the portfolio thus formed. c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?

As a portfolio manager, you are required to take investment decision from the following two alternative scenarios: (Decision Criterion: Select a portfolio on relative risk basis) Scenario 1: Construct a portfolio with 60% investment in ICC:                  Expected Return (in %)        Risk (as Std Div.)      Covariance BPL                  12                                            4                     BPL & ICC: -1.2 ICC                    7                                            2 Scenario 2: Construct equal weighted portfolios from following securities                  Expected Return (in %)        Risk (as Std Div.)      Covariance     PSL                11                                          5                    PSL & IPL: 3.75     IPL                  8                                          3

A. Briefly explain three risk exposures that an analyst should report as part of anenterprise risk management system.Page 4 of 10B. Define market risk and the economic parameters considered when calculatingmarket risk.C. Explain the concept of ‘beta’ within the framework of the Capital Asset PricingModel (CAPM). Discuss the relevance of the covariance between assets returnsfor an investor wishing to diversify the risk of a portfolio

Consider the following performance data for a portfolio manager:               Benchmark Portfolio Index Portfolio     Weight Weight Return Return   Stocks 0.65 0.7 0.11 0.12   Bonds 0.3 0.25 0.07 0.08   Cash 0.05 0.05 0.03 0.025   a.Calculate the percentage return that can be attributed to the asset allocation decision. b.Calculate the percentage return that can be attributed to the security selection decision.

Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items.  Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph

Review the table below listing performance metrics for selected assets. The metrics are defined in the same way as in CAPM   Return  risk  beta riskless asset  4% 0% 0 Market Portfolio  9% 24% 1 Fund A 8% 33% 0.4 Fund B 11% 30% 1.5

Help me please

Darren is considering the following investments; Alphabet, PayZero and FNQ Res.: Probability of return (%) Likely Return Alphabet (%) Likely Return PayZero (%) Likely Return    FNQ Res. (%) 20 6 4 9 30 9 7 14 40 16 10 19 10 18 14 26 a) Calculate the expected return for each asset.b) Calculate the expected return on a portfolio comprising each asset weighted as follows Asset   Weighting (%) Weighting (%) Alphabet 20 PayZero 55 FNQ Res. 25 c) Explain to Darren the benefit of combining the assets into a portfolio instead of undertaking individual investments in Alphabet, PayZero and FNQ Res. d) Calculate the risk attached to each of the investments proposed in Alphabet, PayZero and FNQ Res. Rank each investment in regard to its risk and return. Discuss the likely range of returns that could eventuate for each asset with a 95% level of accuracy. ONLY ANSWER PART C AND D PLEASE

Darren is considering the following investments; Alphabet, PayZero and FNQ Res.: Probability  of return (%) Likely Return Alphabet (%) Likely Return  PayZero (%)   Likely Return     FNQ Res. (%) 20 6 4 9 30 9 7 14 40 16 10 19 10 18 14 26 a) Calculate the expected return for each asset. b) Calculate the expected return on a portfolio comprising each asset weighted as follows Asset   Weighting (%) Weighting (%) Alphabet 20 PayZero 55 FNQ Res. 25 c) Explain to Darren the benefit of combining the assets into a portfolio instead of undertaking individual investments in Alphabet, PayZero and FNQ Res.    d) Calculate the risk attached to each of the investments proposed in Alphabet, PayZero and FNQ Res. Rank each investment in regard to its risk and return. Discuss the likely range of returns that could eventuate for each asset with a 95% level of accuracy.

As the chief investment officer for a money management firm specializing in taxable individual investors, you are trying to establish a strategic asset allocation for two different clients. You have established that Ms. A has a risk-tolerance factor of 8, while Mr. B has a risk-tolerance factor of 27. The characteristics for four model portfolios follow: ASSET MIX Bond 93% 75 32 13 Portfolio 1 2 3 4 Stock 7% 25 GB 87 a. Calculate the expected utility of each prospective portfolio for each of the two clients. Do not round intermediate calculations. Round your answers to two decimal places. 1 2 3 Portfolio Ms. A ER 8% 9 10 11 b. Which portfolio represents the optimal strategic allocation for Ms. A? Which portfolio is optimal for Mr. B? Portfollo-Select-represents the optimal strategic allocation for Ms. A. Portfolio Select is the optimal allocation for Mr. B. c. For Ms. A, what level of risk tolerance would leave her indifferent between having Portfolio 1 or Portfolio 2 as her strategic…

Suppose you visit with a financial adviser, and you are considering investing some of your wealth in one of three investment portfolios: stocks, bonds, or commodities. Your financial adviser provides you with the following table, which gives the probabilities of possible returns from each investment: Stocks Bonds Commodities Probability Return Probability Return Probability Return 20% 15% 0.15 20% 0.6 10% 0.2 0.2 12.5% 0.4 7.5% 0.2 0.25 0.2 0.4 3.8% 0.2 0.2 0% To maximize your expected return, you should choose O A. commodities. B. bonds. OC. stocks. OD. All of the portfolios have the same expected return

Consider the following bootstrapped 3-year performance of an actively managed investor's portfolio and a relevant benchmark: Investor's Portfolio Benchmark Portfolio Iteration Portfolio Value Portfolio Portfolio Value Portfolio Return t=3 Return p.a. t=3 р.а. 1 1.3 9.1% 1.2 6.3% 0.9 -3.5% 0.9 -3.5% 3 0.9 -3.5% 0.8 -7.2% 4 1.2 6.3% 1.1 3.2% 5 1.3 9.1% 1.2 6.3% What is the tracking error of investor's portfolio relative to the benchmark (compounded outperformance) over 3 years (rounded to one decimal place)? Select one: O a. 1.4% ОБ. 2.7% O. 4.5% O d. 4.6% O e. None of the above

Asset allocation is the decision of how you divide your investment portfolio between various assets. Typical asset categories include cash or short-term securities (Treasury bills, CDs, etc.), bonds (municipal bonds, corporate bonds, etc.), and equity funds or equities (stocks, stock mutual funds, etc.). The following table illustrates several model portfolios that you can use as a basis for your own investment plan, depending on such factors as your time horizon, risk tolerance, and investment philosophy. Model Portfolios and Time Horizons Risk Tolerance/Investment Philosophy 0–5 Years 6–10 Years 11+ Years High Risk/Aggressive 10% Cash 20% Bonds 100% Equities   30% Bonds 80% Equities     60% Equities     Moderate Risk/Moderate 20% Cash 10% Cash 20% Bonds   40% Bonds 30% Bonds 80% Equities   40% Equities 60% Equities   Low Risk/Conservative 35% Cash 20% Cash 10% Cash   40% Bonds 40% Bonds 30% Bonds   25% Equities 40% Equities 60% Equities…

An investor wants to determine the safest way to structure a portfolio from several investments, whose annual returns under different scenarios are as follows: Returns Scenario A B. D Probability 1. 0.11 -0.09 0.10 0.07 0.10 -0.11 0.12 0.14 0.06 0.10 3 0.09 0.15 0.11 0.08 0.10 4 0.25 0.18 0.33 0.07 0.30 0.18 0.16 0.1 0.06 0.40 9. Suppose the investor ignores the scenarios have different probabilities. If he has determined his risk aversion value is 0.75, what percentage of his portfolio should be invested in A? percent 2.

QUESTIONS: 1) Assuming that the risk-free rate of return is currently 3,2%, the market risk premium is 6% whereas the beta of HelloFresh SH. stock is 1.8, compute the required rate of return using CAPM. 2) Compute the value of each investment based on your required rate of return and interpret the results comparing with the market values. 3) Which investment would you select? Explain why using appropriate financial jargon (language). 4) Assume HelloFresh SH's CFO Mr. Christian Gaertner expects an earnings upturn resulting increase in growth (rate) of 1%. How does this affect your answers to Question 2 and 3? 5) AACSB Critical Thinking Questions: A) Companies pay rating agencies such as Moody's and S&P to rate their bonds, and the costs can be substantial. However, companies are not required to have their bonds rated in the first place; doing so is strictly voluntary. Why do you think they do it? (Textbook page: 198) B) What are the difficulties in using the PE ratio to value stock?…

Course: FinanceAs a great investor, you are interested in 3 assets to invest: A, B and C. A financial advisor tells you that the returns on the assets are independent of each other, and you are given the following data: Asset A B C E(Ri) 0.05 0.035 0.06 Variance 0.0015 0 0.008 You have not yet analyzed what your degree of risk aversion (A) is, but you know that your utility function behaves as follows: U[ E(Rp)] = E(Rp) - 0.5 * A * Variance. (See attached image for a better understanding) You are asked to:(a) Find the optimal portfolio with these 3 assets {called wA, wB and wC}.b) Calculate the expected return and risk of the optimal portfolio for the following degrees of risk aversion (A):(i) A = 5(ii) A = 10(iii) A = 16   Please ASAP

Alternative 1 2 WN 3 Investment 100% of asset F 50% of asset F and 50% of asset G 50% of asset F and 50% of asset H Year 2019 2020 2021 2022 Asset F 10% 11% 12% 13% Historical Return Asset G 11% 10% 9% 8% Asset H 8% 9% 10% 11%

Respond to the following in a minimum of 175 words: Select 2–3 of the topics below and discuss how they each influence financial decisions regarding risk and return: The capital asset pricing model (CAPM) The constant–growth model Compute forward-looking expected return and risk Risk premiums

Portfolio Management A particular firm’s portfolio is composed of two assets, which we will call" A" and "B." Let X denote the annual rate of return from asset A, and let Y denote the annual rate of return from asset B. Suppose that E(X) = 0.15, E(Y) = 0.20, SD (X) = 0.05, SD (Y) = 0.06, and CORR (X, Y) = 0.30.  (a) What is the expected return of investing 50% of the portfolio in asset A and 50% of the portfolio in asset B? What is the variance of this return?  (b) Replace CORR (X, Y) = 0.30 by CORR (X, Y) = 0.60, 0, -0.30, and -0.60 and answer the questions in part (a). What is the impact of correlation on the expected returns and its variance? Explain why this is so.  (c) Suppose that the fraction of the portfolio that is invested in asset B is f, and so the fraction of the portfolio that is invested in asset A is (1 – f). Let f vary from f = 0.0 to f = 1.0 in increments of 5% (that is, f = 0.0, 0.05, 0.10, 0.15, ...), and compute the mean and the variance of the annual rate of…

Using the information provided in the pictures: Let’s assume, you want to construct a portfolio of risky and riskfreeassets. You wish to generate a 7% return for your complete portfolio E(rc). Using the Capital AllocationLine (CAL) equation - E(rc) = rf + y(E(Rp) - rf)a. Calculate the portion that you need to invest in risky assets and (b). in risk-free assets.c. Calculate the standard deviation of the portfolio.

Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. What is the expected return of the complete portfolio? Group of answer choices a. 10.32% b. 5.28% c. 9.62% d. 8.44% e. 7.58%

O Considering the following information regarding the performance of a portfolio manager in a recent quarter, (i) identify the Alpha of the manager's portfolio compared to benchmark (ii) identify the contributions of asset allocation and security selection to relative performance. Stocks Bonds Treasury bills Manager's Manager's Benchmark Benchmark Return Weight Relarn 1% 2% 2% 1.5% 0.75% 0.5% 0.50 0.30 0.20 weight 0.30 0.30 0.40

1.    calculate the beta of the portfolio below consisting of assets x, y and z. discuss the meaning of the number calculated and include in your answer what type of investor is likely to invest in this portfolio. Asset Weight (Wi) Beta (βi) X 0.30 0.09 Y 0.50 0.90 Z 0.20 0.16

Clients today require their investments to not only produce genuine impact but also constant positive returns. As the portfolio manager explain to your client how you will maintain a positive return on the current portfolio selected.    Please answer #1 to #3 Explain the selection of optimal portfolios. Describe the portfolio approach to investing and the portfolio management process Differentiate between financial and non-financial sources of risks Incorporate the appropriate performance measures for portfolios Evaluate asset returns using the CAPM and other models such as The Sharpe ratio, the Treynor measures and Jensen’s Alpha

Question #2: Asset Allocation Suppose an investor has a choice between two assets: Janus Balanced Mutual Fund (a risky asset) and 30- day treasury bills (a risk-free asset). Investment Expected Return Standard Deviation (6) Portfolio Weight [E(r)] Janus Balanced Fund 8.58% 8.67% 30 day T-bill 0.26% 1-y (a) Calculate the expected return and standard deviation of the overall portfolio---a portfolio consisting of a mixture of the risky asset and risk-free asset. [Hint: Your answers will be expressed as a function of y] (b) Use your answer from Part (a) to draw the capital allocation line (CAL). Be sure to label your axes. Indicate the portfolio that consists only of the risk-free asset on your CAL as Point "A". Indicate the portfolio that consists only of the risky asset on your CAL as Point "B". (c) Calculate the slope of the Capital Allocation Line. (d) Suppose that the investor chooses a portfolio weight of y = 1.5. Find the expected return and standard deviation of the overall…

You are evaluating various investment opportunities currently available and you have calculated expected returns and standard deviations for five different well-diversified portfolios of risky assets.    PORTFOLIO                        EXPECTED RETURN                         STANDARD DEVIATION Q                                            7.8%                                                     10.5% R                                            10.0%                                                   14.0% S                                             4.6%                                                     5.0% T                                             11.7%                                                   18.5% U                                            6.2%                                                     7.5%   a) For each portfolio, calculate the risk premium per unit of risk that you expect to receive [(E(R) –RFR)/ơ]. Assume that the risk free rate is 3.0%. b) Using…

The historical returns for two investments A and B—are summarized in the following table for the period 2016 to 2020, Use the data to answer the questions that follow. a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each investment's returns. c. On the basis of your calculations in part b, which investment is more risky? Compare this conclusion to your observation in part a. a. On the basis of a review of the return data, which investment appears to be more risky? Why? (Choose the best answer below.) A. The riskier investment appears to be investment B, with returns that vary widely from the average relative to investment A, whose returns show less deviation from the average. B. The riskier investment appears to be investment A, with returns that vary widely from the average relative to investment B, whose returns show less deviation from the average. C. Investment A and investment B have equal risk…

A. Briefly explain three risk exposures that an analyst should report as part of anenterprise risk management systemB. Define market risk and the economic parameters considered when calculatingmarket risk.C. Explain the concept of ‘beta’ within the framework of the Capital Asset PricingModel (CAPM). Discuss the relevance of the covariance between assets returnsfor an investor wishing to diversify the risk of a portfolio

Consider a portfolio consisting of the below securities with the below characteristics: Security    Amount Invested($)              Beta              Expected Return A               1,5 MIL                               1.0                12.0%B               1.0 MIL                               1.5                13.5%C               2.0 MIL                               0.8                  9.0% Required:a) Calculate the portfolio’s Beta. b) Calculate the portfolio’s expected return. c) Discuss the Capital Asset Pricing Model (CAPM) explaining what it is used forand which are its limitations.

Portfolio manager wants to optimize the riskiness of the two assets portfolio with the given statistics below:- Assets Return Volatility Weight A 17.00% 15.00% 40.00% B 21.00% 25.00% 60.00%   Correlation -0.70 -0.35 0.25 0.50 0.70   Requirements Calculate the two assets portfolio standard deviation at different correlation levels which are mentioned above and suggest at which correlation is best suits to your portfolio.