APA (edition "APA 6") Business and Management

Investment problems

NEED THIS TO BE DONE IN 45 MINUTES. URGENT PLEASE. all the names and data in the problem are made up.

1)Susanne constructed a value-weighted index portfolio of AMZN, INTL, and CMCSA stocks last month (t=0) when the stock prices were $3156.13, $50.32, and $46.46, respectively. The number of shares outstanding is 0.5 billion for AMZN, 4.25 billion for INTL, and 4.64 billion for CMCSA. Today’s stock prices (t=1) are $3,286.42, $52.97, and $44.95, respectively. There were neither dividend payments nor any changes in the number of shares outstanding. Tim constructed a portfolio at the same time using the same three stocks as Susanne but he constructed an equally weighted index portfolio.

A) What is the return on Susannes value-weighted index?

B) What is the return on Tims equally-weighted index?

You should show all steps and calculations to find the answer to earn full credit.

Hint: It does not matter how much Susanne and Tim invested in their portfolios because I am asking you to calculate returns. However, if you want to use how much money they invested in their portfolios for convenience in your calculations, you can choose any amount, $100 million, for example.

2)Ms. Scott’s hedge fund focusing on growth stocks began with $200 million and reported 8%, 12%, and -2% returns during the next three months. At the end of the second month, the fund had net inflows of $50 million from new investors. Calculate the arithmetic average, geometric average, and dollar-weighted average returns of this fund. You should show all calculations to find the three average returns to earn full credit.

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