Investment Planning Global Chapter 4

Mr D an investor wants to know the average annual return he earn from a stock w, but he should use which of the following method to calculate the most accurate return?

Mr F an investor wants to know which of the approach should he use “ To measure how well the manager has done with single unit of currency” provided manager has no control over cash flow timing, and can be used to compare manager performance with other manager?

TWRR can be calculated using which of the following since it shows compounded growth rate of an investment over period and considered the investment decision or security selection and not affected by timing of cash flow.

Mr T manages his portfolio on his own and thus wants to calculate the return from portfolio , which of the following measure he should use?

Mr M wants to calculate a return which takes into account effect of both timing of cash flow as well as investment decision.

Mr Y has stock of XYZ Ltd. from last 6 month, he purchase the stock @ $950 and its current price is $1050 and dividend of $25 what return he has earned during 6 month holding

—- refers to the difference between the return that is realized and the risk-free rate of return and then dividing the result by the standard deviation of the portfolio.

— is a measure of total risk.

Mr M has decided to invest in a portfolio, which is well diversified across various asset class in such a way that only systematic risk remains, which of the following risk adjusted return measure should be used ?

—- is a measure of Systematic risk.

—- refers to the difference between the return that is realized and the risk-free rate of return and then dividing the result by the beta of the portfolio.

—- measures the difference between an investment’s actual returns and those that could have been earned by its benchmark, with a comparable beta.

Which of the following performance measure refer here:The current market price of a company’s stock, determines how much of the index a single security accounts for.

Market capitalisation=

Mr G takes decision on whether to invest or not to invest in a company stock or bond by analysing and interpreting various financial statements of the company. Which approach he follow?

Mr Q select a stock to invest by making decision on the basis of outcome he get by analyzing economic factor, then industry factors and finally company factors. Which approach he follows?

—- focus on the analysis of the patterns and direction in price movement of a company’s stock, rather than on the information about the company itself.

Mr D an technical analyst in stock market advice his client Mr E to purchase a particular stock by analyzing price and volume movements of stock but Mr E aso him what are the assumption of his analysis?

Technical analyst focus on:

The standard deviation of Stock A is 10% while the Standard deviation of Stock B is 5%. If the Covarinance of AB is .0012 Calculate the r AB (correlation coefficient).

Rank Portfolio A, B, C on the basis of Treynor’s Ratio. Return is 22%, 14%, 16% and market return is 12%.and market SD is 15%. Beta is 1.3, 0.9, and 1.1 respectively for A,B & C. Risk free rate of return is 6%.

What will be the standard deviation of the portfolio if you invest 25% of your money into stock A which has a standard deviation of 8% and rest of the money in stocks B which has a standard deviation of 10%. The correlation coefficient between the returns of the stocks is 0.45.

Mr.Vineet invests 40% of his money in an asset offering 15% return which has standard deviation of 8% and balance in another asset offering a return of 12% with a standard deviation of 5%. What will be the standard deviation of the portfolio if correlation coefficient between two stocks is 0.28?

Mr G not a financial professional calculated the average annual return from a stock by taking the arithmetic average return, is the return so computed takes into effect of compounding over period?

Geometric mean is always higher than arithmetic mean.

Mr B is an contrarian investor so for him a high put-call ratio indicates — signal.

Mr R an investor, he wants to know what does the high number of shares short indicates.

Mr T an investor wants to know the signal that a high advance decline ratio gives?

If 30 days moving average crosses the 200 days moving average from below and goes above what signal it gives?

If a stock current price trade below its support level what signal it gives to the investor?