Re: || VU Expert 2009 || MGT 411 IDEA SOLUTION BY BINISH

On 6/3/11, █▓Binish_Awais█▓ <greyferry@gmail.com> wrote:
> *MGT411 idea solution*
>
> * dont copy solve it by urself *
>
>
>
>
>
> Question no 1:
>
>
>
> Period holding Stock return =D next year/ P today +P next year – P today /P
> today
>
> =150/1000+998-1000/1000
>
> =0.15+ (-2)/1000*100 -à as we have to derive ans in percentage
>
> =14.8%
>
>
>
>
> Question No 2
>
> Variance calculations:
>
>
>
> Compute the expected values:
>
> 900*1/2+1200*1/2=1000
>
> 450 +600=1050
>
>
>
> Subtract from each of the provided pay off :
>
> 900-1050=-150
>
> 1200-1050=150
>
>
>
> Square each of the result:
>
> (-150)2=22500
>
> (150)2=22500
>
>
>
> Multiply each result time with its probability and adds up
>
>
>
> =1/2*22500+1/2*22500
>
> =11250+11250
>
> =22500
>
>
>
>
>
> B Part:
>
> Standard deviation is just take square root of each case result
>
> = square root of (22500) -à first case
>
> =150
>
> =square root of (22500)à second case
>
> = same 150 is ans
>
> Question NO 3
>
> Risk premium = Offered annual return – Return provided by Treasury bills
>
> Risk premium=16-7
>
> Risk Premium=9
>
>
>
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>
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>
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