BUS FPX 4070 Assessment 4

Problem 1: Portfolio Required Return

$10 million encompasses four shares as the head of the investment fund and sets the required return. Provided the investments and games per share, and provided a 12 percent return market test and a 4 percent risk-free interest rate, we can determine the required rate for funds.

Portfolio Beta Calculation:

Portfolio beta = total investment

= (0.30 × 1.50)+(0.10 × (0.50))+(0.20 × 1.25)+(0.40 × 0.75) = 0.95 = (0.30 × 1.50)+(0.10 × (0.10 × (× 0.50))+(0.20 × 1.25)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+(0.40)+.

Required Rate of Return Calculation:

Required Return Rate = Risk-Free Interest + Asset Weighted × (Return Market Rate Tree Risk – Risk-Free Speed)

= 0.04 + 0.95 × 0.08 = 0.04 + 0.076 = 0.116 = 0.116 = 0.04 + 0.95 × 0.076 = 0.07 = 0.0 0.00076 = 0.0076 = 0.0 0.0 0.0 0.0076 = 0.04. 0.076 = 0.076 0.076 = 0.076 = 0.076 = 0.076 = 0.076 = 0.076

Therefore, the necessary return rate for funds is 11.6%.

Problem 2: Required Rate of Return

Since the necessary return on an average share is 14 percent and the risk-free return is 6 percent, it is possible for us to compute the necessary return for two shares and then figure out the variation between them.

Calculation for Stock R:

Necessary Return of Stock R = Risk-Free Speed + Are Rs Beta × (Required Return Rate Reception Rate)

= 0.06+1.5 × (0.14–0.06) = 0.06+1.5 × 0.08 = 0.06+0.12 = 0.18 = 0.18 = 0.06+1.5 × (0.14–0.06) = 0.06+1.08 × 0.12 = 0.08 = 0.08 = 0.08 = 0.0.

Calculation for stocks:

The required return on stock S = 0.06 + 0.75 × (0.14 − 0.06) = 0.06 + 0.75 × 0.08 = 0.06 + 0.06 = 0.12.

There is a difference between the required return of shares and warehouses (0.18 – 0.12 = 0.06), which is 6%.

BUS FPX 4070 Assessment 4 Evaluating Returns and Cash Flow Streams 

Lu, W. B. (2021, October 5). Omni calculator. Dividend for maturity calculator. https://www.omnicalculator.com/finance/yield-to-maturity

Smith, D. (2021, December 1). Sapling. How to calculate the reasonable price of a bond.  https://www.sapling.com/7646916/calculate-fair-value-bond

Wall Street prep (raw). What is the return to call (YTC)? https://www.wallstreetprep.com/knowledge/yield-to-call-ytc/