BUS 405 Week 5 Project Construct a well-diversified portfolio

BUS 405 Week 5 Project Construct a well-diversified portfolio

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Week 5 – Final Project – Construct a well-diversified portfolio 

The student will construct a well-diversified portfolio using an initial investment stake of $50,000 (the portfolio should use 95% of the fund, but they may not use more than $50,000).  The student may include stocks, common or preferred; bonds, corporate or U.S. Treasury bonds; mutual funds; and futures contract or options.  The student will use the closing prices from the first day of the class to determine the price of each issue.  Only whole lots of any issues may be acquired, that is no less than 100 shares of common or preferred stock; no less than 5 corporate bonds or $10,000 for U.S. Treasury Bonds; no fewer than the minimum required investment for any mutual fund; and no fewer than 5 contracts for any option or futures position.  The settlement date will be the first day of Week 3.  The student does not have to use all of the above mentioned securities, but they must use more than one class.  Transaction costs are ignored in the creation of the portfolio.

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BUS 405 Week 5 DQ 2 Option Strategies

BUS 405 Week 5 DQ 2 Option Strategies

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Complete Concept Question 12 from Chapter 15: Recall the options strategies of a protective put and covered call discussed in the text. Suppose you have sold short some shares of stock. Discuss analogous option strategies and how you would implement them. (Hint: They’re called protective calls and covered puts.)  Remember to complete all parts of the question and support your answers with examples from the text and other resources.

BUS 405 Week 5 DQ 1 Hedging with Futures

BUS 405 Week 5 DQ 1 Hedging with Futures

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Complete Concept Question 7 from Chapter 14: The town of South Park is planning a bond issue in six months and Kenny, the town treasurer, is worried that interest rates may rise, thereby reducing the value of the bond issue.  Should Kenny buy or sell Treasury bond futures contracts to hedge the impending bond issue?  Remember to complete all parts of the question and support your answers with examples from the text and other resources.

BUS 405 Week 4 DQ 2 Portfolio Weights

BUS 405 Week 4 DQ 2 Portfolio Weights

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Complete Problem 10 from the Questions and Problems section of Chapter 12: A stock has a beta of .9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets?
b. If a portfolio of the two assets has a beta of .5, what are the portfolio weights?
c. If a portfolio of the two assets has an expected return of 8 percent, what is its beta?
d. If a portfolio of the two assets has a beta of 1.80, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

BUS 405 Week 4 DQ 1 Expected Returns and Deviation

BUS 405 Week 4 DQ 1 Expected Returns and Deviation

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Week 4 – DQ1 – Expected Returns and Deviation
Complete Problems 1, 2, and 3 from the Questions and Problems section of Chapter 11 (shown below). Remember to complete all parts of the questions, and report the results of your analysis.
a. Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone.

State of Economy

Probability of State of the Economy

Security Return if State Occurs

Recession

.30

-8%

Normal

.40

13

Boom

.30

23

  1. Using the information in the previous question, calculate the standard deviation of returns.
    c. Repeat Questions 1 & 2 assuming that all three states are equally likely.

BUS 405 week 4 Chapters 11-13

BUS 405 week 4 Chapters 11-13

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BUS 405 Week 4 Chapter 11 Diversification and Risky Asset Allocation

BUS 405 Week 4 Chapter 12 Return, Risk, and the Security Market Line

BUS 405 Week 4 Chapter 13 Performance Evaluation and Risk Management

BUS 405 Week 4 Assignment Performance Metrics Chapter 13 Problem 22

BUS 405 Week 4 Assignment Performance Metrics Chapter 13 Problem 22

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Week 4 – Assignment – Performance Metrics Chapter 13 Problem 22 Complete Problem 22 in the Questions and Problems section of Chapter 13 (shown below).  When you pick the best choice for your portfolio, defend your decision in a 100 – 200 word essay.
You have been given the following return information for two mutual funds (Papa and Mama), the market index, and the risk-free rate.

Year

Papa Fund

Mama Fund

Market

Risk-Free

2008

-12.6%

-22.6

-24.5%

1%

2009

25.4

18.5

19.5

3

2010

8.5

9.2

9.4

2

2011

15.5

8.5

7.6

4

2012

2.6

-1.2

-2.2

2
Calculate the Sharpe ratio, Treynor ratio, Jensen’s alpha, information ratio, and R-squared for both funds and determine which is the best choice for your portfolio.