Category: Finance

Specify and discuss the optimization problem, e.g. maximize return at a given lever of risk.

IPS

Write an IPS about putin and search up general references like ” average world leader salary” and then source it

why the considered asset classes are appropriate for your client and

brief specification of the ETF that represents the asset class

Appropriate optimization approach

Specify and discuss the optimization problem, e.g. maximize return at a given lever of risk.

Mean-variance optimization results

Use 50 monthly closing returns the reason is to check the performance on the portfolio for the period. Represent the results in table format.

 

How does the Sarbanes–Oxley Act contribute to accurate and quality financial reporting by public corporations? Why is the act considered an excellent example of public corporations meeting a key ethical standard?

Discussion 1-1 FIN-640

Having reviewed the module resources, and using your knowledge and understanding of corporate ethical responsibilities, address the following:

How does the Sarbanes–Oxley Act contribute to accurate and quality financial reporting by public corporations? Why is the act considered an excellent example of public corporations meeting a key ethical standard?

Why is it important for an investor to create a well-diversified investment portfolio? How should an investor allocate investment funds across sectors and industries?

Discuss the influence of COVID-19 on exchange rates around the world. Assess the extent to which government interventions have stabilised the effects of COVID-19 shock on exchange rates.

Discuss the influence of COVID-19 on exchange rates around the world. Assess the extent to which government interventions have stabilised the effects of COVID-19 shock on exchange rates.

What is the fee (as a percentage of the investment in your fund) you could charge your client to make them indifferent between investing in your fund or the index fund?

FINANCIAL ECONOMICS

Download the data from Canvas and calculate the (arithmetic) average excess returns for the five risky portfolios during the period 1/1927-12/1963.

Calculate the betas of the five portfolios during 1/1927-12/1963. Use the SLOPE func- tion in Excel that computes the slope coefficient βi of a linear regression Ri − Rf = αi + βi (Rm − Rf ) + εi

Calculate the alphas of the five portfolios during 1/1927-12/1963 using the INTERCEPT function in Excel. (The intercept is, by definition, the alpha.)

Calculate the expected excess returns predicted by CAPM for this period. According to the CAPM equation we should have E[Ri] − Rf = βi (E[Rm] − R).

Compute this for all five portfolios, including the market portfolio. (You can take the average excess return of the market portfolio from step 1 as your estimate of the expected excess market return.)

Plot the security market line predicted by CAPM, as well as the actual position of the five portfolios in (beta, expected excess return) space.

Provide tables reporting the mean excess return, beta, alpha, and the CAPM predicted excess return for the five portfolios. Round the numbers to three decimal places. For each of the two time periods you should have a completed table as below: [25 pts]
Table 1: CAPM test
Small Big
Low High Low High Market
mean excess return
beta
alpha
CAPM pred. excess return 2

Provide graphs of the security market line and the actual position of the five portfolios for both time periods. [25 pts]

Provide a brief comment on the difference between the CAPM predicted mean excess returns and the actual mean excess returns in the two periods. You can also do this comparison by looking at the magnitude of the alphas (which represent the difference between the predicted and actual mean excess returns).

Compare the two time periods:  does CAPM hold in either period? [5 pts]

Which portfolio has the highest alpha? Provide a brief comment. [10 pts]
Q2. Portfolio choice [35 pts]

Suppose you are a fund manager, managing an active fund with an expected return of 16% and a standard deviation of 25%. There is also an index fund tracking the FTSE 100, which has an expected return of 12% and a standard deviation of 20%. The risk-free rate is 4%.

Calculate the Sharpe ratio of your active fund and the index fund. Compare the ratios and provide an interpretation in no more than four sentences. [10 pts]

Your client has 75% of their wealth invested in your fund and the remaining 25% in the risk-free asset. They consider switching their risky investment to the index fund.

Calculate the expected return and the risk (standard deviation) of a portfolio with 75% invested in the index fund and 25% in the risk-free asset. [5 pts]

Suppose your client does not want to exceed the risk level found in part

Calculate the maximum expected return that they can achieve under this condition by combining your fund with the risk-free asset. What portfolio allocation (i.e., what combination of the risk-free asset and one of the risky funds) should your client choose? [10 pts]

What is the fee (as a percentage of the investment in your fund) you could charge your client to make them indifferent between investing in your fund or the index fund?

What are the advantages and disadvantages of paying cash dividends compared to no cash payments?Which alternative (cash dividend, buybacks, no dividends or other policies) would be best for Berkshire Hathaway shareholders?

Berkshire Hathaway: Dividend policy paradigm

What are the advantages and disadvantages of paying cash
dividends compared to no cash payments?

What are the advantages and disadvantages of share buy backs
compared to no cash payments?

Which alternative (cash dividend, buybacks, no dividends or other
policies) would be best for Berkshire Hathaway shareholders?

Which alternative would you recommend and why?

 Analyze  each company that is  using appropriate ratios and evaluate by comparison with each other (calculate at least two ratios from each category)

Business

An Executive Summary of your findings with a concise view of each company’s financial position compared with the other (20 marks).

Analyze  each company that is  using appropriate ratios and evaluate by comparison with each other (calculate at least two ratios from each category) (30 marks).

Suggestions to potential investors in the industry (10 marks)

Comment on problems encountered while calculating and interpreting financial ratios (5 marks).

Appendices in excel file containing ratio calculations (30 marks).

Overall quality of presentation (5 marks).

What similar problems of the availability of cash and credit might new digital currencies such at Bitcoin solve? If money and financial instruments evolve, what kind of money is best for our society going forward?

FIN WK 1

Additional readings (not required, but recommended by the case study’s author)

Michener, R. (2011, January 13). Money in the American colonies. Retrieved from http://eh.net/encyclopedia/money-in-the-american-colonies/
Schweikart, L. (2001, January 1). The non-existent frontier bank robbery. Retrieved from https://fee.org/articles/the-non-existent-frontier-bank-robbery/

Did it matter to frontier stores that the American dollar was backed by gold? Was there a backstop holding the financial system together?

Considering that local stores and home-grown banks can organically develop and create their own forms of credit, what good is a national currency, or attempts to connect financial markets beyond the immediate area?

What similar problems of the availability of cash and credit might new digital currencies such at Bitcoin solve? If money and financial instruments evolve, what kind of money is best for our society going forward?

Compare the portfolio weights for both the optimal risky portfolio and the optimal complete portfolio using the portfolio optimisation procedure in the Excel sheet for the three methods to forecast expected returns, a), historical, b) static CAPM, and c) Fama-French 3 factor.

Analytical Research Report on a Portfolio Management Problem

Imagine you are doing security analysis on some of the stocks, what happens when you change the expected return? Select a security (or securities) of your choice and analyse the results.

Compare the portfolio weights for both the optimal risky portfolio and the optimal complete portfolio using the portfolio optimisation procedure in the Excel sheet for the three methods to forecast expected returns, a), historical, b) static CAPM, and c) Fama-French 3 factor. Offer an interpretation of your findings.

 

What is the impact of the E.U. regulatory reforms on the behavior of the CRAs?What the impact of E.U legislations on the accuracy of corporate credit ratings?

Finance and Law

What is the impact of the E.U. regulatory reforms on the behavior of the CRAs?What the impact of E.U legislations on the accuracy of corporate credit ratings?

To what extent the E.U members are committed to enforcing the rules?

In addition, there is a lack of clarity in the responsibilities of enforcing the rules, is it the responsibility of the national authority or the ESMA?

Based on the cash flow shown over 10 years for three projects, which should be selected using the concept of IRR and Delta IRR?For machines U and V, details are provided. What will be the Delta IRR and which machine should be selected?

Finance

Based on the cash flow shown over 10 years for three projects, which should be selected using the concept of IRR and Delta IRR?

MARR 14%

Year Project P Project Q Project R
0 $ (29,200.00) $(44,400.00) $(67,800.00)
1 $ 6,200.00 $ 8,825.00 $ 13,825.00
2 $ 8,200.00 $ 10,825.00 $ 16,825.00
3 $ 10,200.00 $ 12,825.00 $ 18,825.00
4 $ 12,200.00 $ 14,825.00 $ 20,825.00
5 $ (31,120.00) $ 11,825.00 $(24,815.00)
6 $ 12,504.00 $ (1,244.44) $ 14,825.00
7 $ 12,504.00 $ 6,618.88 $ 16,825.00
8 $ 12,504.00 $ 7,030.77 $ 18,825.00
9 $ 12,504.00 $ 7,483.84 $ 20,825.00
10 $ 12,504.00 $ 7,982.23 $ 22,825.00
Group of answer choices

First project

Second project

Third project

None. All should be rejected.

Flag question: Question 2
Question 210 pts
The net cash flows for 4 machines are as shown. Match the Delta IRR with the correct values.

Year Project A Project B Project C Project D
0 $ (45,500) $ (52,900) $ (70,500) $ (90,000)
1 $ 7,200 $ 14,325 $ 8,000 $ 14,200
2 $ 9,200 $ 12,325 $ 10,000 $ 24,200
3 $ 11,200 $ 15,325 $ 12,000 $ 24,200
4 $ 13,200 $ 18,325 $ 16,325 $ 24,200
5 $ 15,200 $ 20,325 $ 18,325 $ 24,200
6 $ 17,200 $ 22,325 $ 18,325 $ 24,200
7 $ 13,325 $ 8,119 $ 21,198 $ 24,200
8 $ 15,325 $ 8,531 $ 25,301 $ 24,200
9 $ 17,325 $ 8,984 $ 29,404 $ 18,325
10 $ 19,325 $ 9,482 $ 33,507 $ 20,325
Group of answer choices
The Delta IRR between machines A and B is:

[ Choose ]
The Delta IRR between machines B and C is:

[ Choose ]
The Delta IRR between machines A and C is:

[ Choose ]
The Delta IRR between machines C and D is:

[ Choose ]

Flag question: Question 3
Question 310 pts
For machines U and V, details are provided. What will be the Delta IRR and which machine should be selected?

Machine U Machine V
Initial cost $320,000 $410,000
Life in years 5 6
Inflation (for costs and benefits) 2% p. y.
MARR 7% p. y. c. y.
Project life 12 years
Salvage value of machine today $44,800 $57,400
Machine market value with 2 years of use $153,600
First year estimated costs $39,500 $53,800
First year estimated benefits $113,900 $128,435
Group of answer choices

3.83%, go with Machine U

8.42%, go with Machine U

9.69%, go with either Machine U or V

11.61%, go with Machine V

Flag question: Question 4
Question 410 pts
For Machines X and Y shown, what is the difference between the EUAW for the HICP and the LICP?

Machine X Machine Y
Initial cost $571,000 $933,000
Life 4 6
Inflation (for costs and benefit increase) 3.5% p. y.
MARR 8% p. y. c. y.
Project life 14 years
First year estimated costs $199,850 $363,870
First year estimated benefits $411,120 $606,450
Salvage value of machine today $143,500 $172,400
Market value of machine today with 2 years of use $256,950 $419,850
Group of answer choices

$13,144

$26,830

$39,682

$10,219

Flag question: Question 5
Question 510 pts
The City of Omniville has two options for a viaduct. One is a permanent cement canal and the other a cast iron (CI) pipe. If details for the options are as shown, at what rate of interest should the city be indifferent to either choice?

Cement Canal CI PIPE
Initial cost ($3,000,000) ($1,000,000)
Life Perpetual 15 years
Annual maintenance cost $250,000 $350,000
Salvage $0 $50,000
Initial Rate 5.0% p. y.
Group of answer choices

6.9%

10.66%

16.31%

35.04%

Flag question: Question 6
Question 610 pts
Data for two machines P and Q are as shown below. At what MARR will both machines be equally attractive for installation?

Machine P Machine Q
Initial cost $125,000 $275,000
Life in years 4 6
Inflation per year (for all costs) 2.00%
Benefit increase per year 4.50%
MARR per year compounded yearly 12.00%
Project life in years 12
First year estimated costs $33,750 $63,250
First year estimated benefits $65,000 $112,750
Salvage value of machine (% of initial cost) 12.00% 8.00%
Group of answer choices

11.44%

12.17%

13.19%

17.98%

Flag question: Question 7
Question 710 pts

Data for two machines are shown. Also, four graphs of NPW for the two machines is shown. Which graph represents the data shown below? Quiz 7-7(1).pptx

Machine P Machine Q
Initial cost $105,000 $155,000
Life in years 4 6
Inflation per year (for all costs) 2.00%
Benefit increase per year 4.50%
MARR per year compounded yearly 12.00%
Project life in years 12
First year estimated costs $28,350 $35,650
First year estimated benefits $54,600 $63,550
Salvage value of machine (% of initial cost) 12.00% 8.00%
Group of answer choices

Graph 1

Graph 2

Graph 3

Graph 4

Flag question: Question 8
Question 810 pts

Data for 3 machines are given. For the given MARR, which machine will have the highest EUAW and hence be selected for purchase?

MARR 8.0%

Year Project J Project K Project L
0 $ (101,500) $ (117,435) $ (153,612)
1 $ 6,950 $ 35,850 $ 64,950
2 $ 6,950 $ 35,850 $ 42,950
3 $ 6,950 $ 32,450 $ 52,950
4 $ 6,950 $ 31,950 $ 42,950
5 $ 32,950 $ 31,950 $ 6,950
6 $ 51,950 $ 24,950 $ (13,900)
7 $ 51,950 $ (49,900)
8 $ 51,950 $ 16,350
9 $ 51,950
10 $(103,900.00)
Group of answer choices

Machine L with an EUAW of $1,755

Machine J with an EUAW of $819

Machine K with an EUAW of $1,029

Any will do as all 3 machines have the same EUAW of $1,926