SmartExpert

(118)

$30/per page/Negotiable

About SmartExpert

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Accounting,Business & Finance See all
Accounting,Business & Finance,Economics,English,HR Management,Math Hide all
Teaching Since: Apr 2017
Last Sign in: 60 Weeks Ago, 6 Days Ago
Questions Answered: 7570
Tutorials Posted: 7352

Education

  • BS,MBA, PHD
    Adelphi University/Devry
    Apr-2000 - Mar-2005

Experience

  • HOD ,Professor
    Adelphi University
    Sep-2007 - Apr-2017

Category > Accounting Posted 01 Oct 2017 My Price 14.00

BUS 657 Week 2 Chapter 6 Mini Case Risk, Return, and the Capital Assets Pricing Model

Chapter 6 Mini Case: Risk, Return, and the Capital Assets Pricing Model


Review the mini-case in Chapter 6 of your text and respond to the following:

Andrea Corbridge is considering forming a portfolio consisting of Kalama Corp. and Adelphia Technologies. The two corporations have a correlation of -0.1789, and their expected returns and standard deviations are as follows:

  Kalama Corp. Adelphia Technologies
Expected Return (%) 14.86 23.11
Standard Deviation (%) 23.36 31.89

1.   Calculate the frontier for all possible investment combinations of Kalama Corp. and Adelphia Technologies (from 0% to 100%, in 1% increments). Determine the optimal risky portfolio if the risk-free rate is 3%.
2.   Andrea has $50,000 and wants to earn a 19% expected return on her investment. Describe the optimal manner in which to structure her portfolio-both in dollar amounts and in weights relative to her $50,000-based on the preceding information.
3.   Andrea is also seriously considering buying some stock in Medford Barnett Corporation (MBC). The stock prices of MBC and the S&P for the past 25 months are tabulated below. Andrea estimates that MBC will earn a 14% return during the next year, and she expects the market to earn a 12% return during the same time period. In addition, she expects the relationship exhibited between the S&P and MBC to remain as it has in the past. Assuming that Andrea would be pulling MBC into a fully diversified portfolio, explain if buying the MBC shares a good decision.

Month S&P MBC
1 1198.41 58.04
2 1228.81 65.36
3 1220.33 48.48
4 1234.18 53.32
5 1191.33 57.59
6 1191.50 49.23
7 1156.85 55.57
8 1180.59 50.99
9 1203.60 64.10
10 1181.27 50.45
11 1211.92 50.65
12 1173.82 51.23
13 1130.20 46.68
14 1114.58 51.09
15 1104.24 50.75
16 1101.72 59.80
17 1140.84 52.78
18 1120.68 49.22
19 1107.30 53.47
20 1126.21 49.26
21 1144.94 48.55
22 1131.13 61.32
23 1111.92 48.06
24 1058.20 58.88
25 1050.71 46.19

Remember to show all your work.

Carefully review the Grading Rubric (Links to an external site.)Links to an external site. for the criteria that will be used to evaluate your assignment.

Answers

SmartExpert
(118)
Status NEW Posted 01 Oct 2017 12:10 AM My Price 14.00

BUS----------- 65-----------7 W-----------eek----------- 2 -----------Cha-----------pte-----------r 6----------- Mi-----------ni -----------Cas-----------e R-----------isk-----------, R-----------etu-----------rn,----------- an-----------d t-----------he -----------Cap-----------ita-----------l A-----------sse-----------ts -----------Pri-----------cin-----------g M-----------ode-----------l-----------

Attachments

file 1506817202-BUS 657 Week 2 Chapter 6 Mini Case Risk Return and the Capital Assets Pricing Model.docx preview (2071 words )
C-----------hap-----------ter----------- 6 -----------Min-----------i C-----------ase-----------: R-----------isk-----------, R-----------etu-----------rn,----------- an-----------d t-----------he -----------Cap-----------ita-----------l A-----------sse-----------ts -----------Pri-----------cin-----------g M-----------ode-----------l -----------Nam-----------e -----------BUS-----------657-----------: C-----------orp-----------ora-----------te -----------Man-----------age-----------ria-----------l F-----------ina-----------nce----------- P-----------rof-----------ess-----------or ----------- Da-----------te ----------- Ch-----------apt-----------er -----------6 M-----------ini----------- Ca-----------se:----------- Ri-----------sk,----------- Re-----------tur-----------n, -----------and----------- th-----------e C-----------api-----------tal----------- As-----------set-----------s P-----------ric-----------ing----------- Mo-----------del----------- I-----------n t-----------oda-----------yâ€-----------™s -----------soc-----------iet-----------y, -----------a c-----------ons-----------erv-----------ed -----------por-----------tfo-----------lio----------- is----------- ex-----------tre-----------mel-----------y i-----------mpo-----------rta-----------nt -----------to -----------an -----------acc-----------omp-----------lis-----------hed----------- in-----------ves-----------tor-----------. -----------And-----------rea----------- Co-----------rbr-----------idg-----------e i-----------s c-----------ons-----------ide-----------rin-----------g f-----------orm-----------ing----------- a -----------por-----------tfo-----------lio----------- co-----------nsi-----------sti-----------ng -----------of -----------Kal-----------ama----------- Co-----------rp.----------- an-----------d A-----------del-----------phi-----------a T-----------ech-----------nol-----------ogi-----------es.----------- ----------- Th-----------e t-----------wo -----------cor-----------por-----------ati-----------ons-----------
file 1506817361-BUS 657 Week 2 Chapter 6 Mini Case Risk Return and the Capital Assets Pricing Model.xlsx preview (28 words )
Ch-----------apt-----------er -----------6 M-----------ini----------- Ca-----------se:----------- Ri-----------sk,----------- Re-----------tur-----------n, -----------and----------- th-----------e C-----------api-----------tal----------- As-----------set-----------s P-----------ric-----------ing----------- Mo-----------del-----------Exp-----------ect-----------ed -----------Ret-----------urn----------- (%-----------)St-----------and-----------ard----------- De-----------via-----------tio-----------nSt-----------and-----------ard----------- De-----------via-----------tio-----------n (-----------%)K-----------ala-----------ma -----------Cor-----------p.A-----------del-----------phi-----------a T-----------ech-----------.Co-----------rre-----------lat-----------ion-----------Ris-----------k-f-----------ree----------- Ra-----------teW-----------eig-----------ht -----------of -----------Ade-----------lph-----------ia -----------Wei-----------ght----------- of----------- Ka-----------lam-----------a P-----------ort-----------fol-----------io -----------Ret-----------urn-----------PAR-----------T 1-----------:Va-----------ria-----------nce----------- -----------
Not Rated(0)