Answer:
1) identify your problem: Try to describe the problem as much as possible, as opposed to focusing on the potential consequences or implications of the problem.
2) Pin point the problem
3) so that means you should do research based on the problem ^
4)Try evaluating the problem.. perhaps looking at it in perspective ^
5)see how the problem could affect you or others
6) Then work out a plan to solve the problem
Answer:
The correct answer to the following question is $14,30,000.
Explanation:
Given information -
Portfolio contains $1.3 million of stocks
With beta of the portfolio being - 1.1
Here manager wants to hedge the risk of his portfolio by selling the index in the futures market by entering in to an futures contract which can be defined as a contract , where both buyer and seller agrees to buy or sell a particular product in the future at a predetermined price and quantity and quality, this is a standardized contract.
Amount that manager should sell in futures = $130,00,00 x 1.1
= $ 14,30, 000
Answer:
The new rate of return is 15.4%
Explanation:
The reviewed estimate on the rate of return on the stock will be:
• Beforehand
• 14% = α + [4%*1] + [6%*.4]
α = 7.6%
• With the changes:
• 7.6% + [5%*1] + [7%*.4]
Now a new rate of return is 15.4%
Answer:
The value of the stock today is $33.33
Explanation:
The constant growth model of the DDM approach will be used to calculate the value of this stock today.
The formula for Value of the stock today using the constant growth model is,
V or P0 = D1 / r - g
The Value of the stock today is,
V or P0 = 3 / (0.13 - 0.04)
V or P0 = $33.33