Which stock from the ones we had in our project had the highest Treynor ratio?1 pointFacebookAmazonAppleNetflixGoogle
Question
Which stock from the ones we had in our project had the highest Treynor ratio?1 pointFacebookAmazonAppleNetflixGoogle
Solution 1
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Solution 2
To determine which stock had the highest Treynor ratio, we need to calculate the Treynor ratio for each stock and compare the results.
Step 1: Calculate the Treynor ratio for each stock. The Treynor ratio is calculated by dividing the excess return of a stock by its beta. The excess return is the difference between the stock's return and the risk-free rate of return.
Step 2: Calculate the excess return for each stock. To calculate the excess return, subtract the risk-free rate of return from the stock's return. The risk-free rate of return is typically the return on a government bond or a similar low-risk investment.
Step 3: Calculate the beta for each stock. Beta measures the sensitivity of a stock's returns to the overall market returns. It is calculated by regressing the stock's returns against the market returns.
Step 4: Divide the excess return by the beta to calculate the Treynor ratio for each stock.
Step 5: Compare the Treynor ratios of each stock. Identify the stock with the highest Treynor ratio. This stock has the highest risk-adjusted return relative to its beta.
By following these steps, you can determine which stock from the ones in your project had the highest Treynor ratio.
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Question 5Which stock from the ones we had in our project had highest value at risk with 99% confidence?1 pointFacebookAmazonAppleNetflixGoogle
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Additionally, when the weight on Kellogg grows, the portfolio's alpha, Treynor ratio, and Sharpe ratio all decrease, indicating that the performance may not be optimised if Kellogg is given too much weight.
.Afinancialengineeeranticipatesthatinterestonstocksonacertaincommoditylisted onthestockwillincreasebe28%overthenextfiveyears.Hethereforebuys10000 stocksfromanotherinvestorwhogiveshimarateof21%compoundedmonthly whoseeffectiverateisthreepercentagepointshigherthanthecurrentrateofthe stock.AssumingthattheeachstockcostsGHS25: a.Calculatethecurrentrateofthestock b.Findtheamountofinterestthatwillbeearnedbytheinvestorwhosellsher sharestothefinancialengineer c.Howmuchinterstwillbeearnedbytheengineerassuminghisprediction comestopass d.Howmuchmoneywillhegainorloseasssumingtherateofthestockfalls25%?
Given 3.2% monthly return of a stock, 0.2% monthly risk free rate, and beta of 1.5, calculate the Treynor ratio1 point0.010.020.03
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