excluding any portfolio that offers an inferior return for a given amount of risk. While this concept seems obvious‚ one of your clients‚ Laura Spegele‚ is considering purchasing a stock she will bear. To convince her that the acquisition is not desirable‚ you want to demonstrate the trade-off between risk and return. While it is impractical to show the trade-off for all possible combinations‚ you believe that illustrating several combinations of risk and return and applying the same analysis to the specific
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Juan (a) Expected Portfolio Return and Risk Expected Return Risk Covariance = (0.002)(0.06)(0.09)=0.0000108 (b) Minimum Variance (Pendix Ltd) The minimum variance for this portfolio is 0.693‚ indicating that risk is minimized when 69.3 percent of the portfolio is invested in Pendix’s shares. A rational investor would not allow Pendix’s shares to account for more than this proportion as they could get a higher return and lower risk by reducing
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How do the economies of scale affect break-even analysis? In the video on leverage‚ leverage is compared to a fulcrum in that you need just the right balance of leverage. That would seem to indicate that there is a point where the leverage is just right and that too little leverage may be just as harmful as too much leverage. Do you think this is true? The book discusses the difference between efficiency and effectiveness. Which one do you think is the most important in business and why? Answers:
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Homework ES 1. (TCO 8) The historical returns on large-company stocks‚ as reported by Ibbotson and Sinquefield‚ are based on: (Points : 3) the largest 20 percent of the stocks traded on the NYSE. the stocks of the largest 10 percent of the publicly traded firms in the U.S. all of the stocks listed on the NYSE. the stocks of the 500 companies included in the S&P 500 index. 2. (TCO 8) If the financial markets are efficient‚ then: (Points : 3)
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Accounting Rate of Return (ARR) ARR provides a quick estimate of a project’s worth over its useful life. ARR is derived by finding profits before taxes and interest. ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cash flows‚ and it does not account for the time value of money. ARR is most often used internally when selecting projects. It can also be used to measure the performance of projects and subsidiaries within
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Frank Miller’s Batman: The Dark Knight Returns questions what is right and what is wrong. It makes you wonder if the government is the bad guy‚ or if it is the criminals‚ or maybe even Batman himself. Miller uses duality and creates closure to show that there is always another side of the coin and all you have to do is flip it to see it. He also uses art to build context and tension by starting with art that is abstract. The art slowly changes to brighter colors and less abstract art as the tension
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Chapter 7 External Economies of Scale and the International Location of Production Copyright © 2012 Pearson Education. All rights reserved. Preview • Types of economies of scale • Economies of scale and market structure • The theory of external economies • External economies and international trade • Dynamic increasing returns • International trade and economic geography Copyright © 2012 Pearson Education. All rights reserved. 7-2 Introduction • The models of comparative
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The essay of “Groom Service” and “The Return” “Groom Service” by Michael Anthony Dorris and “The Return” by Ngugi wa Thiongo are two short story which have the common theme of “love” and the common situation of “ the marriage”. Although the two stories have common themes and situation related to acceptance‚ acknowledgement‚ and recognition‚ the difference between the two story influence the meaning a lot. The common theme of story is “love”. The protagonist in “Groom Service”‚ Bernard‚ had
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“The Return of Martin Guerre” by Natalie Zemon Davis provides the read with an interesting case of a present‚ Arnaud du Tihl‚ stealing Martin Guerre identity and almost getting away with it. The story create two campus of thought on Bertrande’s motive. One side being defended by Davis‚ and arguing she masterminded the whole plan. While Robert Finlay arguing she was innocent. Davis argument is the most believable with too many questions and too many assumption‚ and to neatly package together that
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Financial Management- II Case Notes RPL and MRPL - Analyzing Risk and Return Submitted By- Sumer Lal Meena Exe-PGP 2007-09 � BACKGROUND READING THE CAPITAL ASSET PRICING MODEL (CAPM) Some‚ but not all‚ of the risk associated with a risky investment can be eliminated by diversification. The reason is that unsystematic risks‚ which are unique to individual assets‚ tend to wash out in a large portfolio‚ but systematic risks‚ which affect all of the assets in a portfolio to some extent‚ do not
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