Fin 550 560 5. during the past five years, you owned two stocks that


Don't use plagiarized sources. Get Your Custom Essay on
Fin 550 560 5. during the past five years, you owned two stocks that
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!
Order Essay

fin 550 560

5. During the past five years, you owned two stocks that had the following annual rates of return:

Year Stock T Stock B

1 .19 .08

2 .08 .03

3 -.12 -.09

4 -.03 .02 

5 .15 .04

a. Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure?

b. Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) By this measure, which is the preferable stock?

c. Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) By this relative measure of risk, which stock is preferable?

d. Compute the geometric mean rate of return for each stock. Discuss the difference between the arithmetic mean return and the geometric mean return for each stock. Discuss the differences in the mean returns relative to the standard deviation of the return for each stock.

7.7. A stockbroker calls you and suggests that you invest in the Lauren Computer Company. After analyzing the firm’s annual report and other material, you believe that the distribution of expected rates of return is as follows:

Lauren Computer Co.

Possible Rate of Return Probability

-.60 .05

-.30 .20 

-.10 .10

.20 .30

.40 .20

.80 .15

9. During the past year, you had a portfolio that contained U.S. government T-bills, long-term government bonds, and common stocks. The rates of return on each of them were as follows:

U.S. government T-bills 5.50%

U.S. government long-term bonds 7.50

U.S. common stocks 11.60

12. Assume that the consensus required rate of return on common stocks is 14 percent. In addition, you read in Fortune that the expected rate of inflation is 5 percent and the estimated long-term real growth rate of the economy is 3 percent. What interest rate would you expect on U.S. government T-bills? What is the approximate risk premium for common stocks implied by these data?

4. a. Someone in the 36 percent tax bracket can earn 9 percent annually on her investments in a tax-exempt IRA account. What will be the value of a one-time $10,000 investment in 5 years? 10 years? 20 years?

b. Suppose the preceding 9 percent return is taxable rather than tax-deferred and the taxes are paid annually. What will be the after-tax value of her $10,000 investment after 5, 10, and 20 years?

5. a. Someone in the 15 percent tax bracket can earn 10 percent on his investments in a tax-exempt IRA account. What will be the value of a $10,000 investment in 5 years? 10 years? 20 years?

b. Suppose the preceding 10 percent return is taxable rather than tax-deferred. What will be the after-tax value of his $10,000 investment after 5, 10, and 20 years?

6. Assume that the rate of inflation during all these periods was 3 percent a year. Compute the real value of the two tax-deferred portfolios in problems 4a and 5a.

Each homework assignment is required to be submitted in a single Excel file with each problem calculated on a separate worksheet within that file, clearly labeled with the question number. All formulas are required to be linked in the respective function ribbons for the purpose of authenticating calculations.

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Professor’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
  • 2-hour delivery
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
Getting into any engagement is not as simple as it sounds, especially when done remotely. Thus, you as our client need solid assurances that your expectations will be met and exceeded. Taking this into consideration, we are very serious when it comes to honoring our end of the bargain. On this page, we have clearly stipulated our assurances to clear any anxiety, doubts, or uncertainties that you may have. We are sure that after reading the below short guarantee highlights, you will be entirely confident that your needs will be exceeded!

Money-back guarantee

Our money-back guarantee assures you of the safety of your money. Several reasons may make you want to get a refund, and we have the best refund system since it works INSTANTLY! Yes, I said instantly! Many of our competitors place complex processes for you to get a refund. Some websites make you wait for 14 days! For what? We know that you obviously have other uses for the money; that is why we refund on the spot. Here at Employed Professors, we simply look into the issue and press a button, and your money is back. No waiting! No back and forth!

Zero-plagiarism guarantee

Being the worst academic offense that is severely punished by all institutions, plagiarism is a NO at Employed Professors! In fact, we are always ready with evidence that your paper is plagiarism-free.

Our elite algorithm for detecting plagiarism is updated regularly, as our developers work 24/7 to make sure that it captures even the slightest instance. We provide a plagiarism report FREE OF CHARGE so that you are confident when submitting your paper to that stickler professor or TA. This way, we ensure that you will never get expelled for this heinous act!

Free-revision policy

Sometimes, for absolutely no reason, your TA or professor might require you to make some changes to your paper. Other times, further customization can be needed as you deem fit; of course, you are the king, and you command, and we obey! As such, if you feel that a specific aspect has not been captured as you like, you can always send the paper back for revision, and this is also FREE OF CHARGE! All you need to clearly state are the new guidelines that you want our professor to use to accomplish your desired objective in the way that you want it.

Privacy policy

Our clients' confidentiality is our priority; this is a fact that is undeniable in our company. We CANNOT give out the data/information that we request from you even at GUNPOINT! This is how far we can go to protect your identity. Furthermore, our databases are regularly services and secured with an impenetrable security system. Over the years that we have been in this essential industry, we have never had a data breach, thanks to our top-notch technical department that ensure the confidentiality of your information. A detailed summary of our privacy policy is as below:

24/7 and on-the-spot-response system

Unlike our competitors who will make you wait even 30 minutes to respond to your inquiries, order messages, and support help, we have developed a seamless communication system that notifies our always-standby support personnel to respond to you. Furthermore, we have given our professors access to this high-tech system so that they can respond promptly to ensure that no time is wasted. Remember, this business' most valuable element is time, and delays are usually catastrophic. The last thing we would imagine is you having to lose points for lateness. Thus, we ensure that prompt communication is ever-present, without failure!

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages