Convert prices to total return (% change in the price) = (Pt – Pt-1) / Pt-1 2. Remove outliers – sort data and remove anything +/- 20% 3. Calculate historical average and historical risk X-BAR = Σx/n Calculate the sum of the total return and divide by the number of observations • Variance = σ2 = Σ(x – x bar) 2 / (n-1) Fix X-BAR‚ double click to apply to all dates‚ get the sum‚ divide by (n-1) Risk = σ = √σ = SQRT(Variance) = standard deviation 4. Average Matrix Excel Options
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1. Calculating Returns ( LO1‚ CFA1) Suppose you bought 100 shares of stock at an initial price of $ 37 per share. The stock paid a dividend of $ 0.28 per share during the following year‚ and the share price at the end of the year was $ 41. Compute your total dollar return on this investment. Does your answer change if you keep the stock instead of selling it? Why or why not? 2. Calculating Yields ( LO1‚ CFA1) In the previous problem‚ what is the capital gains yield? The dividend yield? What is
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Amazon.com—Not Your Average Bookstore Jeffrey Bezos‚ CEO and founder of Amazon.com‚ is running what some people refer to as the “world’s biggest bookstore.” The story of Bezos’s virtual bookstore teaches many lessons about online business. Out of nowhere‚ this digital bookstore turned an industry upside down. What happened here was more than just creating a Web site. Bezos conceived and implemented an intelligent‚ global digital business. Its business is its technology; its technology is its business
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of the question 10 marks (paper 2) 20 minutes on it Explain the law of diminishing returns using average and marginal product curves Definition Law of diminishing returns refer to how the marginal production of a factor of production starts to progressively decrease as the factor is increased‚ in contrast to the increase that would otherwise be normally expected. Triple A Law of diminishing returns – as more and more of a variable factor is added to a fixed factor‚ output will rise initially
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The law of diminishing returns only applies in the Short Run‚ when only one factor of production is variable and can be increased. The other factors of production are fixed. Thus as the variable factor of production is increased the marginal product of that factor will rise at first‚ but will at some point begin to fall. Returns to scale can only occur when no factors of production are fixed. If the quantities of all of the factors of production are increased‚ then output will also increase. However
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Capital structure for Kaynat Manufacting is 50% common stock‚ 15% preferred stock‚ and 35% debt. If the cost of common equity for the firm is 19.6%‚ the cost of preferred stock is 12.9% and the before tax cost of debt is 9.5% what is the weighted average cost of capital? The firm’s tax rate is 35%. Answer: WACC = (50% x 19.6%) + (15% x 12.9%) + ( 35% x 9.5% x 65% = Q2: The following are the information of a company: |Type of capital |Book value (Tk) |Market value (Tk)
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Accounting rate of return The accounting rate of return (ARR) is a way of comparing the profits you expect to make from an investment to the amount you need to invest. The ARR is normally calculated as the average annual profit you expect over the life of an investment project‚ compared with the average amount of capital invested. For example‚ if a project requires an average investment of £100‚000 and is expected to produce an average annual profit of £15‚000‚ the ARR would be 15 per cent. The
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THE SPIRTUAL COMFORT OF NATURE IN WILLIAMS WORDSORTH’S “LINES COMPOSED A FEW MILES ABOVE TINTERN ABBEY” The spirituality and influence of nature in William Wordsworth’s "Lines Composed a Few Miles Above Tintern Abbey‚" explains the impact of and comfort provided by nature throughout his life. As Wordsworth grows older‚ he tries to share this with his sister. Using the moon as a metaphor for his older (evening) stage in life‚ he tells her “Therefore let the moon Shine on
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Effect of Artificial Sweeteners on Average Metabolic Rate of Goldfish (Carassius Auratus) Introduction Artificial Sweeteners are sweeter than natural sugar‚ replace sugar if someone wants to eat less sugar and have been proven to be safe and even are a healthier option. But also as opposed to natural sugar‚ the energy that artificial sweeteners give a person is less. This is why it will be interesting to study the effect on metabolic rate of goldfish when in fish water that contains artificial sweetener
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asked for your advice. The three stocks currently held all have b = 1.0‚ and they are perfectly positively correlated with the market. Potential new Stocks A and B both have expected returns of 15%‚ are in equilibrium‚ and are equally correlated with the market‚ with r = 0.75. However‚ Stock A’s standard deviation of returns is 12% versus 8% for Stock B. Which stock should this investor add to his or her portfolio‚ or does the choice not matter? Answer: B‚ Stock B Since she has a portfolio the number
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