FNCE30001 Study Guide - Final Guide: Standard Deviation, Cash Flow, Expected Return

• School: University of Melbourne
• Department: Finance
• Course: FNCE30001
• Professor: Brown

Document Summary

Chapter 5: questions 5 & 10 on pages 89-90 of bodie, et al principles of investments. Problem 1. 1 [question 5 on page 89 of bodie, et al principles of investments] Suppose your expectations regarding the share market are as follows: Use equations 5. 6 to 5. 8 to compute the mean and standard deviation of the hpr on shares. Problem 1. 2 [question 10 on page 90 of bodie, et al principles of investments] The end-of-year cash flow derived from the portfolio will be either 000 or 000, with equal probabilities of 0. 5. What will the expected rate of return on the portfolio be: now suppose you require a risk premium of 15%. Chapter 5: questions 11-14, on page 90 of bodie, et al principles of investments. For questions 11-14, assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%.