Questions from General Investment

Q: We have seen that market timing has tremendous potential value. Would

We have seen that market timing has tremendous potential value. Would it therefore be wise to shift resources to timing at the expense of security selection?

Q: Consider the rate of return of stocks ABC and XYZ.

Consider the rate of return of stocks ABC and XYZ. a. Calculate the arithmetic average return on these stocks over the sample period. b. Which stock has greater dispersion around the mean return? c. C...

Q: XYZ’s stock price and dividend history are as follows: /

XYZ’s stock price and dividend history are as follows: An investor buys three shares of XYZ at the beginning of 2018, buys another two shares at the beginning of 2019, sells one shar...

Q: A manager buys three shares of stock today and then sells one

A manager buys three shares of stock today and then sells one of those shares each year for the next three years. His actions and the price history of the stock are summarized below. The stock pays no...

Q: Based on current dividend yields and expected capital gains, the expected

Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 12% and 16%, respectively. The beta of A is .7, while that of B is 1.4. The T-bill r...

Q: Consider the two (excess return) index-model regression results

Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 6%, and the market’s average return was 14%. Performance is...

Q: Do you agree with the following claim? “U.S

Do you agree with the following claim? “U.S. companies with global operations can give you international diversification.” Think about both business risk and foreign exchange risk.

Q: The Generic Genetic (GG) Corporation pays no cash dividends currently

The Generic Genetic (GG) Corporation pays no cash dividends currently and is not expected to for the next four years. Its latest EPS was $5, all of which was reinvested in the company. The firm’s expe...

Q: In Figure 25.2, we provide stock market returns in

In Figure 25.2, we provide stock market returns in both local and dollar-denominated terms. Which of these is more relevant? What does this have to do with whether the foreign exchange risk of an inve...

Q: Now suppose the investor in Problem 3 also sells forward £5

Now suppose the investor in Problem 3 also sells forward £5,000 at a forward exchange rate of $2.10/£. a. Recalculate the dollar-denominated returns for each scenario. b. What happens to the standard...