Shares for Deloitte plc and PWC ltd have the following historical dividends and price data

Required:

(a) Calculate the realized rate of return (or holding period return) for each share in each year. Assume an equally weighted portfolio. What would the realized rate of return on the portfolio be in each year from 2001 through to 2006? What are the average returns for each share and for the portfolio?

(b) Calculate the standard deviation of returns for each share and for the portfolio.

(c) Based on the extent to which the portfolio has a lower risk than the shares held individually, would you assess that the correlation co-efficient between returns on the two shares is closer to 0.9, 0.0 or -0.9?

(d) If you added more shares at random to the portfolio, what is the most accurate statement of what would happen to σp?

σp would remain constant

σp would decline to somewhere in the vicinity of 15%, or

σp would decline to zero if enough shares were included

a)            CEMENCO Stock Return

Find the Average Return and Risk (as measured by Standard Deviation) of CEMENCO since 2000.

b) You have a portfolio consisting of 20 percent CEMENCO stock (β = 0.81), 40 percent of Monrovia Breweries (Club Beer) stock ((β = 1.67). How much market risk does the portfolio have? How does this compare with the general market?

c) Data from the last eight decades for S & P 500 index yield the following statistics: average excess return = 7.9%; Standard Deviation = 23.2%.

(i)To the extent that these averages approximated investor expectations for the period, what must have been the average coefficient of risk aversion? Formula: E (r_m) – r_f = Ā ẟ²_m

(II)If the coefficient of risk aversion were actually 3.5, what risk premium would have been consistent with the market’s historical standard deviation?

d) A portfolio’s return is 12%, its standard deviation is 20% and the risk-free rate is 4%. Which of the following would make the greatest increase in the portfolio’s Sharpe ratio?

An increase of 1% in expected return?

A decrease of 1% in the risk-free rate?

A decrease of 1% in its standard deviation?

Please answer below two question in your own words and in brief

The following passage summarizes some of the central points in the debate as to the value of corporations to devote significant resources to corporate social responsibility:

Stakeholders Versus Shareholders

Although corporate social responsibility may appear to be an “apple-pie virtue,” it is quite controversial. Below are some of the chief arguments for and against it:

Proponents will claim that it…

• BURNISHES A COMPANY’S REPUTATION. In the wake of corporate scandals, corporate social responsibility builds goodwill—and can pay off when scandals or regulatory scrutiny inevitably arise.
• ATTRACTS TALENT. Many young professionals expect their employers to be active in social issues. Membership in Netimpact.org, a network of socially-conscious MBA graduates, jumped from 4,000 in 2002 to 10,000 in 2004.

On the other hand, Detractors will argue that it…

• COSTS TOO MUCH. Giving by corporate foundations reached an all-time high of $3.6 billion last year. However, it can come at the expense of other priorities, such as research and development, and is rarely valued by Wall Street.
• IS MISGUIDED. Many corporate executives believe, as economist Milton Friedman does, that the role of business is to generate profits for shareholders—not to spend others’ money for some perceived social benefit.

1. What is your view on this issue? Would that view be different if you were a stockholder of a firm?
2. Do you know of any companies that have engaged in Socially Responsible behavior? Please explain, Please use an example.)

How do you interpret the price indices in Exhibit 3? How do economists construct them? Use Excel regression to analyze the relationship between the adjusted price index (dependent variable and year (independent variable). Interpret your regression findings by discussing the coefficient of determination (R-squared), the regression coefficient, the regression equation, and the p value.   Can you use the regression equation to predict the price indices? Take into account statistical, macroeconomic, and other considerations.

EXHIBIT 3

Describe the mathematical models of the boundary value problem to evaluate the elastic deflection of the beam based on Euler-Bernoulli and Timoshenko theories with finite difference discretisation (for numerical integration and differentiation)

Describe the mathematical models of the boundary value problem to evaluate the elastic deflection of the beam based on Euler-Bernoulli and Timoshenko theories with finite difference discretisation (for numerical integration and differentiation)

For the data set below, find the upper outlier boundary.
154 160 146 131 148 164 199 169 139 165

The Indonesian government issued a government bond in 2004, with a maturity of 20 years, the coupon rate is 13%. Currently (the year 2014), the Indonesian government issues government bonds with a maturity of 20 years with a coupon rate of 8%. Note, that the coupon rate decreases from 13% to 8%. Calculate the fair value for the first bond (issued in 2004, and will mature in 2024). The par is 1,000,000 and the yield is 13%

Weight gain during pregnancy. In 2004, the state of North Carolina released to the public a large data set containing information on births recorded in this state. This data set has been of interest to medical researchers who are studying the relationship between habits and practices of expectant mothers and the birth of their children. The following histograms show the distributions of weight gain during pregnancy by 855 younger moms (less than 35 years old) and 136 mature moms (35 years old and over) who have been randomly sampled from this large data set. The average weight gain of younger moms is 30.87 pounds, with a standard deviation of 14.32 pounds, and the average weight gain of mature moms is 29.32 pounds, with a standard deviation of 13.43 pounds. Do these data provide strong evidence that there is a significant difference between the two population means? Conduct a hypothesis test. Round all numeric answers to 4 decimal places.

1. Which set of hypotheses should the researcher use?
A. ?0H0: ?1−?2=0p1−p2=0, ??HA: ?1−?2≠0p1−p2≠0
B. ?0H0: ?1−?2=0μ1−μ2=0, ??HA: ?1−?2>0μ1−μ2>0
C. ?0H0: ?1−?2=0μ1−μ2=0, ??HA: ?1−?2≠0μ1−μ2≠0
D. ?0H0: ?1−?2=0p1−p2=0, ??HA: ?1−?2<0p1−p2<0

2. Calculate the test statistic. t =

3. Calculate the p-value for this hypothesis test.
p value =

4. Suppose that a researcher today decides to replicate this study. Using the information from the 2004 study, they calculate an effect size of 0.11. Next, they obtain a new sample of 124 younger moms and a new sample of 86 mature moms and, using their new sample data, conduct the same hypothesis test. They calculate a p-value of 0.266 and an effect size of 0.096. Does their new study confirm or conflict with the study from 2004?
A. The researcher cannot make a comparison because the sample sizes are not the same.
B. It confirms the 2004 study because the effect sizes are nearly the same.
C. It contradicts the 2004 study because the effect sizes are not exactly the same.
D. It contradicts the 2004 study because the p-value is larger.
E. It confirms the 2004 study because the sample of moms from today is independent of the sample of moms from 2004.

Does the responsibility for drug education and prevention lie primarily with the family, the schools, the church, the police, or with the state and federal governments? How would you rank order their responsibility? Justify your order.