Preview

Beta Case Study

Good Essays
Open Document
Open Document
886 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Beta Case Study
25721
Investment Management

BMC Case Study

Student Name: Junwei Wang
Student ID: 11516655

Class Time: 6 p.m. – 9 p.m. Tuesday
Lecturer: Wing Bui

Table of content
Q 1. 1
Q 2. 1
Q 3. 2
Q 4. 2
Q 5. 3

Beta Management Company I. Case Background
Beta Management Company was founded in 1988 by Ms. Wolfe. Beta Management Company is a small investment management company based in a Boston suburb. Beta Management Company was successful in 1989 and 1990. This success had brought in enough new money to double the size of the company. However, Ms. Wolfe had lost some potential new clients who had thought it unusual that Beta Management used only an index mutual fund and picked none of its own stocks. Sarah Wolfe was considering Beta’s new goal and directions for coming year.

II. A. Ms. Wolfe decided to follow “ index” to adjust equity market exposure. This is a good strategy due to that at the beginning of the foundation of the company, the size of her account was small and there were no much money for her to take a risk. The strategy she followed was the lowest risky way. Ms. Wolfe kept a majority of Beta’s funds in no-load, low-expense index funds, adjusting the level of market exposure between 50% and 99% of Beta’s funds in an attempt to “time the market”.

B. Ms. Wolfe now has decided to increase her equity exposure to 80% with the purchase of one of the California R.E.I.T. and Brown Group, Inc. While Ms. Wolfe wanted to extend her business, she found that some potential clients thought it unusual that Beta Management used only an index mutual fund and picked none of its own stocks, Ms. Wolfe was engaging her new strategy. Unlike before, Beta increase the equity exposure from 50% to 80%. Beta used to have 1%

You May Also Find These Documents Helpful

  • Good Essays

    The influence of a systematic risk like inflation on a stock by using the beta coefficient. The beta coefficient, ß, tells us the response of the stock's return to a systematic risk. Beta measured the responsiveness of a security's return to a specific risk factor, the return on the market portfolio. The magnitude of the beta describes how great an impact a systematic risk has on a stock's returns. A beta of +1 indicates that the stocks return rises and falls one for one with the systematic factor. Thus, every stock will have a beta associated with each of these systematic risks: an inflation beta, a GNP beta, and an interest-rate…

    • 845 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Role playing Tom Henne, I’m trying to penetrate into pension market and change the way…

    • 1371 Words
    • 11 Pages
    Good Essays
  • Satisfactory Essays

    Week 2

    • 420 Words
    • 2 Pages

    Cost of equity = Rf + (Rm-Rf) beta = 3.5% + 7.5% X 1.3 = 13.25%…

    • 420 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Hrm/531 Week 9

    • 1413 Words
    • 6 Pages

    14)The beta of a portfolio is a function of the standard deviations of the individual securities in the portfolio the proportion of the portfolio invested in those securities and the correlation between the return of those securities…

    • 1413 Words
    • 6 Pages
    Good Essays
  • Good Essays

    4. What value has active portfolio management (deviating from the policy portfolio indexes and weights) added to the endowment from the period 1992-2000?…

    • 916 Words
    • 4 Pages
    Good Essays
  • Good Essays

    For the beta of Papa John’s equity (PZZA), we regressed the monthly return on PZZA with the monthly return on the S&P 500 index. Through doing so, we determined that PZZA had a market beta of 0.53. (Please refer to the attached spreadsheet for calculations of beta.)…

    • 956 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Week 1 Case Study

    • 299 Words
    • 2 Pages

    : The decision problem is that Hurricane Katrina has struck Louisiana now there is no location to have the conference.…

    • 299 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    David Fletcher Case

    • 900 Words
    • 4 Pages

    Despite Fletcher’s success as a portfolio manager, it has become clear to him over the recent years that he needs help managing the information on which he based his investment decisions. Though his analyst and former administrative assistant, Stephanie Whitney, provided support with health care, environmental, and retail stocks, Fletcher concluded that it was time to hire a team of people who could relieve him of the the in-depth company analyses which took so much of his time. After speaking to various colleagues regarding strategies on selecting and managing research teams, he discovered three general approaches. A fellow JFP portfolio manager developed a stable of part-time consultants to whom he turned to as needed. An acquaintance at one of the largest firms employed seasoned industry specialists with discretion to buy and sell stocks in their particular areas. Finally, his friend and colleague Robert Tepper, who ran a firm similar in size and strategy to JFP, employed a small team of analysts that specialized in various industries. Tepper explained that he typically hired people who possessed less than five years of investment experience. This would allow Tepper the opportunity to train each analyst in his own investment method,…

    • 900 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    This essay sets out to know which type of investment fund is better for a retail investor. By this, we will consider the meaning and operations of an index tracker fund, as well as that of the actively managed funds. Furthermore, identify the advantages of index tracker funds over actively managed funds and draw conclusions in relation to the topic above.…

    • 2511 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    Wittenburg started working at AEFA Equity Investment Department (EID) in November 1998 at the age of 46 (Walsh, 2011). According to the portfolio managers, Wittenburg provided outstanding service and displayed excellent investment skills and in 2000, she was name Analyst of the Year (Walsh, 2011). In 2001, AEFA hired a new Chief Investment Officer (CIO) and 2002 the CIO initiated a redesign of EID. The project would take approximately two years; add an additional three portfolio managers, a new satellite office and the merger or movement of certain funds to AEFA’s satellite office (Walsh, 2011). During a discussion regarding new hires, the CIO stated he was not averse to hiring younger managers or analysts to grow with the company (Walsh, 2011).…

    • 916 Words
    • 4 Pages
    Good Essays
  • Good Essays

    We will estimate beta equity using data of comparable firms, focusing on production only sodium chlorate: Brunswick Chemical and Sothern Chemicals. To calculate beta asset we’ll use information about beta equity and equity-to-value ratio. As well we assume that debt beta equals zero:…

    • 1892 Words
    • 8 Pages
    Good Essays
  • Satisfactory Essays

    J.D. Williams, Inc is an investment advisory firm that manages more than $120 million in funds for its numerous clients. The company uses an asset allocation model that recommends the portion of each client’s portfolio to be invested in a growth stock fund, an income fund, and a money market fund. To maintain diversity in each client’s portfolio, the firm places limits on the percentage of each portfolio that may be invested in each of the three funds. General guidelins indicate that the amount invested in the growth fund must be between 20% and 40% of the total portfolio value. Similar percentages for the other two funds stipulate that between 20% and 50% of the total portfolio value must be in the income fund and at least 30% of the total portfolio value must be in the money market fund.…

    • 276 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    1. In the abstract, what is Blanka Dobrynin hoping to accomplish through her active-investor strategy?…

    • 870 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    asdf

    • 4824 Words
    • 20 Pages

    Therefore, beta was a measure of the market risk of PSC’s portfolio while alpha measured its expected return if market risk were eliminated…

    • 4824 Words
    • 20 Pages
    Good Essays
  • Powerful Essays

    b) To provide investors a framework and techniques for selecting various instruments available or a portfolio that best meets the overall objectives and constraints of an investor.…

    • 3220 Words
    • 13 Pages
    Powerful Essays

Related Topics