Problem 8-01, Which Portfolio is Preferred?
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
Given pairs of investments… choose the preferred portfolio for the rational investor based on risk and return characteristics.
Given pairs of investments… choose the preferred portfolio for the rational investor based on risk and return characteristics.
Given the percent invested in stock along with the expected return and standard deviation for both stocks and ask you to find the standard deviation and expected return for the portfolio. Then they ask how it would change with different correlations and whether the investor is better off investing in the portfolio as opposed to just stock A.
Determine how Percival can improve upon his corporate bond portfolio by investing in an index fund, treasuries, and a combination of bonds and the index was given a correlation between the two.
Given a list of stocks and their betas along with the interest rate and market return… determine the expected return for one of them, the highest return, the lowest return, and how they would be affected by changing interest rates.
Given the treasury bill rate and expected return on the market portfolio and ask you to find the risk premium, calculate the required return using a beta, determine whether or not it has a positive NPV, and lastly what beta is given an expected return.
Given the cash flows, beta, risk-free rate, and expected return… determine the NPV of the project.