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FIN2601-25-EX06

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The

financial manager of Blackbelt Technologies wishes to determine the standard

deviation from a proposed investment project. The expected returns from the

project are related to the future performance of the economy over the period as

follows:

Economic scenario

Probability of occurrence

Rate of return

Strong

growth

0,25

15%

Moderate

growth

0,50

12%

Low

growth

0,25

8%

 

What

is the standard deviation of the proposed investment project?

0%
0%
0%
0%
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Your grandmother's portfolio is structured with 40% of

her funds allocated to Transatlantic Transaction and the remaining 60% invested

in Treasury Bills. This allocation strategy reflects a balance between potential

returns and risk mitigation, aligning with her investment objectives and risk

tolerance. The investment broker overseeing your grandmother's

portfolio has furnished pertinent details to help in strategic decision-making:

Portfolio

Probability

Possible return

Transatlantic Transaction

0,6

0,3

0,1

–20%

  15%

30%

Moderated Mediums

0,6

0,3

0,1

14%

  12%

  30%

 

You are required to calculate the expected return of

your grandmother's portfolio.

100%
0%
0%
0%
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Le

Panier French Bakery, a cupcake business, has recorded the following returns

over the last four years:

Year

Return

2021

3,5%

2022

5,0%

2023

    65%

2024

13,7%

 

What

is the average return on the company’s shares?

0%
0%
0%
0%
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Tom

Noel holds the following portfolio:

Share

Investment

Beta

Class A share

R35

000

0,95

Class B share

                  R65

000

0,80

Class C share

                  R50

000

1,00

Class D share

                  R200

000

1,20

 

What is the portfolio beta?

0%
0%
0%
0%
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Tiny

Legend Learning Academy believes the probability distribution shown below holds

true for its shares.

State of the economy

Probability of state occurring

Shares expected return

Strong

growth

0,25

20%

Moderate

growth

0,50

12%

Low

growth

0,25

8%

 

What

is the coefficient of variation on the corporation shares?

0%
0%
0%
0%
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An

asset moves in the same direction as the market while being twice as responsive

as the market. If the risk-free rate of return is 8% and the market return is

11%, what would the required return on the asset be?

0%
0%
0%
0%
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A company has the opportunity to invest in one

of three possible investments. The financial analysts predict the following

possible outcomes for the three investments:

Outcome

Probability

Investment C:

Expected return

Investment D:

Expected return

Investment E:

Expected return

Pessimistic

30%

2%

8%

6%

Most likely

40%

10%

10%

8%

Optimistic

30%

18%

12%

11%

Calculate the range of returns for the three

investments.

0%
0%
0%
0%
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