Question 1

Standard Deviation Compute the standard deviation of the five monthly returns for PG&E: 1.25 percent, -1.50 percent, 4.25 percent, 3.75 percent, and 1.98 percent

Accepted Answer

To compute the standard deviation, we first find the mean of the returns:

(1.25 - 1.5 + 4.25 + 3.75 + 1.98) / 5 = 2.346%

Then we subtract the mean from each return, square the differences, and find the average of the squares:

[(1.25 - 2.346)^2 + (-1.5 - 2.346)^2 + (4.25 - 2.346)^2 + (3.75 - 2.346)^2 + (1.98 - 2.346)^2] / 5 = 7.071%

Finally, we take the square root of the average:

sqrt(7.071%) = 2.287%

Therefore, the answer is choice D.

Question 2

Portfolio Weights You have $15,040 to invest. You want to purchase shares of Company Air at $42.50, Company B at $51.50, and Company F at $9.75. How many shares of each company should you purchase so that your portfolio consists of 20 percent Company A, 40 percent Company B, and 40 percent Company F? Report only whole stock shares.

Accepted Answer

The answer of Portfolio Weights You have $15,040 to invest....

Question 3

Standard Deviation The standard deviation of the past five monthly returns for K and Company are 2.28 percent, 2.64 percent, -1.05 percent, 4.25 percent, and 9.25 percent. What is the average monthly return?

Accepted Answer

The answer of Standard Deviation The standard deviation of the...

Question 4

Portfolio Return At the beginning of the month, you owned $8,000 of Company G, $8,000 of Company S, and $3,000 of Company N. The monthly returns for Company G, Company S, and Company N were 7.80 percent, 1.50 percent, and -0.75 percent. What is your portfolio return?

Accepted Answer

The portfolio return is calculated by weighting each company's return by its proportion in the portfolio. The total portfolio value is $19,000. The weighted return is: (8000/19000 * 7.80%) + (8000/19000 * 1.50%) + (3000/19000 * -0.75%) = 3.79%.

Question 5

Portfolio Weights If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of Motor City at $7.75, what are the portfolio weights of each stock?

Accepted Answer

To calculate the portfolio weight for each stock, first calculate the total value of the portfolio, which is (100 shares of Air Line * $42.50/share) + (250 shares of BuyRite * $53.25/share) + (350 shares of Motor City * $7.75/share) = $13,562.50. Then, divide the value of each stock by the total value of the portfolio.

For Air Line: (100 shares * $42.50/share) / $13,562.50 = 0.2096 or 20.96%
For BuyRite: (250 shares * $53.25/share) / $13,562.50 = 0.6566 or 65.66%
For Motor City: (350 shares * $7.75/share) / $13,562.50 = 0.1338 or 13.38%

Therefore, the correct answer is C, as it provides the correct portfolio weight for each stock.

Question 6

Rank the following three stocks by their risk-return relationship, best to worst. Rail Haul has an average return of 10 percent and standard deviation of 19 percent. The average return and standard deviation of Idol Staff are 12 percent and 22 percent; and of Poker-R-Us are 11 percent and 25 percent.

Accepted Answer

The answer of Rank the following three stocks by their...

Question 7

Portfolio Weights If you own 600 shares of Alaska Corporation at $23.25, 450 shares of Best Company at $34.50, and 150 shares of Motor Company at $6.95, what are the portfolio weights of each stock?

Accepted Answer

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Question 8

Sprint Nextel Corp stock ended the previous year at $25.00 per share. It paid a $2.57 per share dividend last year. It ended last year at $18.89. If you owned 650 shares of Sprint, what was your dollar return and percent return?

Accepted Answer

The answer of Sprint Nextel Corp stock ended the previous...

Question 9

Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 14 percent and standard deviation of 30 percent. The average return and standard deviation of WholeMart are 12 percent and 25 percent; and of Fruit Fly are 25 percent and 40 percent.

Accepted Answer

Night Ryder has the highest standard deviation (30%), followed by Fruit Fly (40%) and WholeMart (25%). Therefore, the ranking from highest to lowest total risk level is: Fruit Fly, Night Ryder, WholeMart.

Question 10

Standard Deviation The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the average monthly return?

Accepted Answer

To calculate the average monthly return, we need to add all five monthly returns and divide the sum by the number of months (which is 5 in this case).
Avg. Monthly Return = (2.75% - 0.75% + 4.15% + 6.29% + 3.84%) / 5 = 3.256%
Therefore, the answer is option B (2.581%).

Question 11

Average Return The past five monthly returns for PG Company are 1.25 percent, -1.50 percent, 4.25 percent, 3.75 percent, and 1.98 percent. What is the average monthly return?

Accepted Answer

To find the average monthly return, we add up all the monthly returns and divide by the number of months:

(1.25 - 1.50 + 4.25 + 3.75 + 1.98) / 5 = 2.146

So the average monthly return is 2.146%. Rounded to the nearest hundredth, the answer is 1.95%. Therefore, the best choice is A.

Question 12

Rank the following three stocks by their risk-return relationship, best to worst. Night Ryder has an average return of 33 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 10 percent and 20 percent; and of Fruit Fly are 19 percent and 33 percent.

Accepted Answer

Night Ryder has the highest average return but also the highest standard deviation, making it the riskiest of the three stocks. WholeMart has a lower average return and lower standard deviation, making it less risky. Fruit Fly has a higher average return than WholeMart but also a higher standard deviation, making it riskier than WholeMart but less risky than Night Ryder. Therefore, the ranking from best to worst risk-return relationship is Night Ryder, Fruit Fly, WholeMart.

Question 13

Portfolio Weights If you own 1000 shares of Alaska Corporation at $19.95, 250 shares of Best Company at $17.50, and 250 shares of Motor Company at $2.50, what are the portfolio weights of each stock?

Accepted Answer

To find the portfolio weights, we need to calculate the total value of the portfolio and then divide the value of each stock by the total value.

The total value of the portfolio is: 
1000 shares of Alaska Corporation at $19.95 = $19,950 
250 shares of Best Company at $17.50 = $4,375 
250 shares of Motor Company at $2.50 = $625

Total value = $25,950

Now we can find the portfolio weights: 
Alaska = ($19,950 / $25,950) = 0.7693 
Best = ($4,375 / $25,950) = 0.1685 
Motor = ($625 / $25,950) = 0.0241

Therefore, the portfolio weights are: 
Alaska = .7996 
Best = .1754 
Motor = .0250

The answer is C.

Question 14

FedEx Corp stock ended the previous year at $113.39 per share. It paid a $0.40 per share dividend last year. It ended last year at $126.69. If you owned 300 shares of FedEx, what was your dollar return and percent return?

Accepted Answer

To calculate the dollar return, we need to first find out the capital gain on the 300 shares. The capital gain is (126.69 - 113.39) * 300 = $4,007. To this, we add the dividend income of $0.40 per share * 300 shares = $120. Thus, the total dollar return is $4,127.

To calculate the percentage return, we divide the dollar return by the initial investment and multiply by 100. The initial investment was 300 shares * $113.39 per share = $34,017. So, the percentage return is (4,127/34,017) * 100 = 12.08%.

Therefore, the best choice is B, which is the closest to our calculated values.

Question 15

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

Accepted Answer

The answer of Portfolio Return The table below shows your...

Question 16

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

Accepted Answer

The answer of Portfolio Return The table below shows your...

Question 17

Portfolio Weights If you own 400 shares of Air Line Inc. at $44.50, 500 shares of BuyRite at $52.90, and 100 shares of Motor City at $9.25, what are the portfolio weights of each stock?

Accepted Answer

To find the portfolio weights, we need to first calculate the total value of the portfolio, which is (400 shares x $44.50) + (500 shares x $52.90) + (100 shares x $9.25) = $17,800 + $26,450 + $925 = $45,175.

Next, we divide the value of each stock by the total value of the portfolio to find the portfolio weight:

- Air Line: (400 shares x $44.50) / $45,175 = 0.3940 or 39.40%
- BuyRite: (500 shares x $52.90) / $45,175 = 0.5855 or 58.55%
- MotorCity: (100 shares x $9.25) / $45,175 = 0.0205 or 2.05%

Therefore, the answer is C: Air Line = .3940, BuyRite = .5855, MotorCity = .0205

Question 18

Portfolio Weights You have $45,050 to invest. You want to purchase shares of Company Air at $10.25, Company B at $15.10, and Company F at $9.05. How many shares of each company should you purchase so that your portfolio consists of 30 percent Company A, 50 percent Company B, and 20 percent Company F? Report only whole stock shares.

Accepted Answer

The answer of Portfolio Weights You have $45,050 to invest....

Question 19

Portfolio Return At the beginning of the month, you owned $6,000 of Company G, $8,000 of Company S, and $1,000 of Company N. The monthly returns for Company G, Company S, and Company N were 7.25 percent, -1.50 percent, and -0.23 percent. What is your portfolio return?

Accepted Answer

To find the portfolio return, we need to calculate the weighted average of the returns for each company.

Weighted average return = (weight of G * return of G) + (weight of S * return of S) + (weight of N * return of N)

Weight of G = $6,000 / ($6,000 + $8,000 + $1,000) = 0.4286
Weight of S = $8,000 / ($6,000 + $8,000 + $1,000) = 0.5714
Weight of N = $1,000 / ($6,000 + $8,000 + $1,000) = 0.0714

Weighted average return = (0.4286 * 0.0725) + (0.5714 * (-0.0150)) + (0.0714 * (-0.0023)) = 0.0209 or 2.09%

Therefore, the answer is B, 2.09%.

Question 20

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

Accepted Answer

The answer of Portfolio Return The table below shows your...

Quiz 9: Characterizing Risk and Return

Standard Deviation Compute the standard deviation of the five monthly returns for PG&E: 1.25 percent, -1.50 percent, 4.25 percent, 3.75 percent, and 1.98 percent

Standard Deviation The standard deviation of the past five monthly returns for K and Company are 2.28 percent, 2.64 percent, -1.05 percent, 4.25 percent, and 9.25 percent. What is the average monthly return?

Portfolio Return At the beginning of the month, you owned $8,000 of Company G, $8,000 of Company S, and $3,000 of Company N. The monthly returns for Company G, Company S, and Company N were 7.80 percent, 1.50 percent, and -0.75 percent. What is your portfolio return?

Portfolio Weights If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of Motor City at $7.75, what are the portfolio weights of each stock?

Portfolio Weights If you own 600 shares of Alaska Corporation at $23.25, 450 shares of Best Company at $34.50, and 150 shares of Motor Company at $6.95, what are the portfolio weights of each stock?

Sprint Nextel Corp stock ended the previous year at $25.00 per share. It paid a $2.57 per share dividend last year. It ended last year at $18.89. If you owned 650 shares of Sprint, what was your dollar return and percent return?

Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 14 percent and standard deviation of 30 percent. The average return and standard deviation of WholeMart are 12 percent and 25 percent; and of Fruit Fly are 25 percent and 40 percent.

Standard Deviation The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the average monthly return?

Average Return The past five monthly returns for PG Company are 1.25 percent, -1.50 percent, 4.25 percent, 3.75 percent, and 1.98 percent. What is the average monthly return?

Portfolio Weights If you own 1000 shares of Alaska Corporation at $19.95, 250 shares of Best Company at $17.50, and 250 shares of Motor Company at $2.50, what are the portfolio weights of each stock?

FedEx Corp stock ended the previous year at $113.39 per share. It paid a $0.40 per share dividend last year. It ended last year at $126.69. If you owned 300 shares of FedEx, what was your dollar return and percent return?

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

Portfolio Weights If you own 400 shares of Air Line Inc. at $44.50, 500 shares of BuyRite at $52.90, and 100 shares of Motor City at $9.25, what are the portfolio weights of each stock?

Portfolio Return At the beginning of the month, you owned $6,000 of Company G, $8,000 of Company S, and $1,000 of Company N. The monthly returns for Company G, Company S, and Company N were 7.25 percent, -1.50 percent, and -0.23 percent. What is your portfolio return?

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?