Solution Assignment 3 Essay

Solution Assignment 3 Essay Solution Assignment 3 Essay Solutions to Assignment 3 1. a. using excel Stock A Stock B i. alpha -.609 2.964 ii. beta 1.183 1.021 iii. standard deviation of Residuals 4.676 4.983 iv. correlation with Market .757 .684 v. Average of the Market = 3.005 vi. Variance of the Market = 20.908 vii. First, we need Rf from SML 2.964 = RF + 1.183 [ 3.005 – RF] ïÆ'ž solving for RF = 3.352 Therefore for next year E(R A) = 3.352 + 1.183 (5 – 3.352) = 5.3 b . (i ) From single‑index model use: Rj = ÃŽ ±i - ÃŽ ²i Rm RA = ‑.609 + 1.183(3.005) = 2.946 RB = 6.032 RC = 3. 556 From the single‑index model the variance is: ÏÆ'2 i = ÃŽ ²i 2 ÏÆ'2 m + ÏÆ'ei2 ÏÆ'2 A = (1.183)2(20.908) + (4.677)2 = 51.14 ÏÆ'2 B = 46.62 ÏÆ'2 C = 265. 0 *The answers should be identical whichever way means and variances are computed. Any slight differences are due to rounding errors in the calculations. (ii) RA = 2.946 ÏÆ'2 A = 51.15 RB = 6.031 ÏÆ'2 B = 46.61 RC = 3. 554 ÏÆ'2 C = 265.0 c. (i ) Under the single‑index model covariance: cov(i j) = ÃŽ ²i ÃŽ ²j ÏÆ'm2 CovAB = (1.183)(1.021)(20.908) = 25.254 CovAC = 57.433 CovBC = 49.568 (ii) From the historic data itself: cov(i j) = ÃŽ £ (1/T-1)(Ri ‑ Ri)(Rj ‑ Rj) CovAB = 18.462 CovAC = 61.618 CovBC = 54.085 The calculations of covariances are different because the single‑index model computes covariances as if the correlation between residuals from the equation Ri = ÃŽ ±i + ÃŽ ²i Rm + ei are zero [cov(ei ej) = 0]. While computing covariance from historic data is equivalent to incorporating the historic level of cov(ei ej) into the measurement of covariance. d. For a portfolio made up of one‑half stocks A and B: (i) Expected return and standard deviation under the single‑index model: Rp = 1/2(2.946) + 1/2(6.032) = ÏÆ'p = [(1/2)2(51.14) + (1/2)2(46.62) + 2(1/3)2(25.25)+2(1/3)2(57.43) = (ii) Expected return and standard deviation using historical data: Rp = 1/2(2.946) + 1/2(6.031) = ÏÆ'p = [(1/2)2(51.15) + (1/2)2(46.61) + +2(1/3)2(18.46) = 2. a)We know by the CAPM:.18 = .04 + (.11 - .06) ï  ¢j which gives ï  ¢j = 2 The CAPM assumes that the market is in equilibrium and that investors hold efficient portfolios, i.e., that all portfolios lie on the security market line. b) Let â€Å"y† be the percent invested in the risk-free asset. Portfolio return is the point on the market line where 18% = y (4%) + (1 - y) (11%) and y = -1. Therefore, (1-y) = 2, i.e., the individual should put 200% of his portfolio into the market portfolio. 3. Assuming that the company pays no dividends, the one period expected rate of return, E(Rj) = [E(P1) - P0 ] / P0 where E(P1) = $179. Using the CAPM, we have E(Rj) = Rf + [E(Rm) - Rf] ï  ¢j = [E(P1) - P0 ] / P0 Substituting in the appropriate numbers and solving for P0, we have .08 + [.18 - .08]2.0 = [$100 - P0]/ P0 and solving for P0 = $154.3 4. Using the definition of the correlation coefficient, we have .8 = and cov (K, M) = .8(.25) (.2) = .04 Using the definition of Beta, we can calculate the systematic risk of MF: ï  ¢k = .04/(.2)2 = 1.0 The systematic risk of a portfolio is a weighted average of asset’s ï  ¢Ã¢â‚¬Ëœs. If â€Å"y† is the percent of MF, ï  ¢P = (1 - y) ï  ¢F+ y ï  ¢K or .8 = (1 - y ) 0 + y 1.0 or y =80% In this case the investor would invest an amount equal to 80 percent of his wealth in MF in order to obtain a portfolio with a ï  ¢ of .8 5. a) Using E(RP) = Rf + [E(Rm) - Rf] ï  ¢P to solve for ï  ¢P=2.2 b)We know that efficient portfolios have no unsystematic risk. The total risk is ï  ³2P= ï  ¢2P ï  ³2m + ï  ³2ï  ¥ and since the unsystematic risk of an efficient portfolio, ï  ³2ï  ¥ is zero, ï  ³P = ï  ¢P ï  ³m = 2.2 (.18) = .396 or 39.6% c)The definition of correlation is CorrJ m = cov (RJ,Rm) ï  ³J ï  ³m To find cov(Rj,Rm), use the definition of ï  ¢j = cov(Rj,Rm) ï  ³2 m Solving, we get Corr J m = 1.0, which indicates that the efficient portfolios are perfectly correlated with the market (and with each other). 6. We know from the CAPM : .13 = .04 + (.08)ï  ¢ J , solving which gives ï  ¢J= .1.125 If the rate of return covariance with the market

A Introduction to Sociology Statistics

A Introduction to Sociology Statistics Sociological research can have three distinct goals: description, explanation, and prediction. The description is always an important part of the research, but most sociologists attempt to explain and predict what they observe. The three research methods most commonly used by sociologists are observational techniques, surveys, and experiments. In each case, measurement is involved that yields a set of numbers, which are the findings, or data, produced by the research study. Sociologists and other scientists summarize data, find relationships between sets of data, and determine whether experimental manipulations have affected some variable of interest. The word statistics has two meanings: The field that applies mathematical techniques to the organizing, summarizing, and interpreting of data. The actual mathematical techniques themselves. Knowledge of statistics has many practical benefits. Even a rudimentary knowledge of statistics will make you better able to evaluate statistical claims made by reporters, weather forecasters, television advertisers, political candidates, government officials, and other persons who may use statistics in the information or arguments they present. Representation of Data Data are often represented in frequency distributions, which indicate the frequency of each score in a set of scores. Sociologists also use graphs to represent data. These include pie graphs, frequency histograms, and line graphs. Line graphs are important in representing the results of experiments because they are used to illustrate the relationship between independent and dependent variables. Descriptive Statistics Descriptive statistics summarize and organize research data. Measures of central tendency represent the typical score in a set of scores. The mode is the most frequently occurring score, the median is the middle score, and the mean is the arithmetic average of the set of scores. Measures of variability represent the degree of dispersion of scores. The range is the difference between the highest and lowest scores. The variance is the average of the squared deviations from the mean of the set of scores, and the standard deviation is the square root of the variance. Many kinds of measurements fall on a normal, or bell-shaped, curve. A certain percentage of scores fall below each point on the abscissa of the normal curve. Percentiles identify the percentage of scores that fall below a particular score. Correlational Statistics Correlational statistics assess the relationship between two or more sets of scores. A correlation may be positive or negative and vary from 0.00 to plus or minus 1.00. The existence of a correlation does not necessarily mean that one of the correlated variables causes changes in the other. Nor does the existence of a correlation preclude that possibility. Correlations are commonly graphed on scatter plots. Perhaps the most common correlational technique is Pearsons product-moment correlation. You square the Pearsons product-moment correlation to get the coefficient of determination, which will indicate the amount of variance in one variable accounted for by another variable. Inferential Statistics Inferential statistics permit social researchers to determine whether their findings can be generalized from their samples to the populations they represent. Consider a simple investigation in which an experimental group that is exposed to a condition is compared with a control group that is not. For the difference between the means of the two groups to be statistically significant, the difference must have a low probability (usually less than 5 percent) of occurring by normal random variation. Sources: McGraw Hill. (2001). Statistics Primer for Sociology. mhhe.com/socscience/sociology/statistics/stat_intro.htm

Importance of Health Care Insurance Case Study Example | Topics and Well Written Essays - 1000 words

Importance of Health Care Insurance - Case Study Example Health cover policies require that when a business has a total number going up to 25 full-time employees, they will be mandated to tax credits covering a total of 50% the population of staff insurance premium cost. Health insurance is all-inclusive for children and will cover them until they mature enough without parents incurring extra costs when paying for the cover. By subscribing to insurance wasteful spending is minimized, fraud is regulated and the expansion program for the preventive services is well ensured. The general essence of health insurance covers cut on medical spending while giving individuals an array of choices when seeking for health care services. For the cover to reach millions of people, extra taxes will be paid by mostly the high earners, which may affect an individual or a business. Health covers that come with many options will demand a complicated shopping affair hence confusing. To ensure full cooperation, the insurance policy demands that one pays monthly or else pay a fine for breaching the policy. It leaves nearly half of major nations without cover due to the inability to subscribe to it. Development of other features i.e. the CHIP takes away taxpayers money. Based on a full-time employment and employer mandate to pay insurance cover, many people have been put on shorter work hours in a bid to evade the payment of the cover. Lower paid workers get better benefits when compared to highly paid workers. It is generally accepted that youths are healthy and need no health cover, hence money paid for a youth is considered a waste. The focus of health insurance cover is to ensure that people are covered while it should consider that the cost of Medicare is addressed. Individual and family: It is sometimes termed as a comprehensive cover. The period is more than 12 months while renewable.  

The limitation of powers of European Community member states in the Essay

The limitation of powers of European Community member states in the field of commercial activity in the light of creation of a single market in goods - Essay Example Another form of cooperation, the European Atomic Energy Community was also established in 1957 and came into force in 1958. The above three treaties established the cooperation among six European countries - the ones that began the efforts for the establishment of common interests and policies in the European region. In accordance with Van Gerven (2005, p.710) among the three treaties existed at the period the most important was ‘the European Economic Community, which created, progressively, a common market of goods, persons, services, and capital subject to free competition and with a common commercial policy, and which was applicable to all economic sectors (including agriculture and transport) not addressed by the other two treaties’. Through the years, the European Community was enlarged through the participation of more countries of Europe. On the other hand, the targets set by the European Union were also differentiated. One of the most important differentiations w as that introduced with the Single European Act (1986, February) which targeted the improvement of the conditions of the European market and the interpretation of the rules included in the article 14(2) EC that describe the frontiers of the common market area. At a next level, the monetary, judicial and political integration of the European Union was targeted by the member states. The above targets were supported by the Maastricht Treaty (1992) and the Amsterdam Treaty (1997). The treaties of Maastricht and Amsterdam developed the role of the European Union promoting its power to intervene in the political and monetary decisions on member states. Specific issues related with the acceptance of the European Union by the member states were also supported through the above two treaties. Towards this direction, it is noticed by Youngs (2001, p.30) that ‘the Maastricht treaty for the first time listed the

Power and Control in Dracula :: Dracula Essays

Power and Control in Dracula In the universe, no one being has complete control over another. In Bram Stoker's novel Dracula, God, Dracula, Nature, and Humanity have some form of influence over each other, whether it be direct control or as the instrument through which another must exert its power. In this paper I will examine the ways that power and control are presented in Dracula. One of the main challenges to God's power is Dracula. God does nothing to help the character of Lucy. Why? She has not committed any great sin. Yet she still fall’s prey to Dracula. There are two possible explanations for this: First that God does not have the power to save her from Dracula. Dracula is almost outside of God’s power. Since Dracula has renounced God he (God) no longer has domain over Dracula. Or second, God feels that she is being justly punished for her sins (sins which the reader is never informed of). Lucy is very flirtatious, and possibly she is more promiscuous than we are led to believe. In Francis Ford Coppola’s film version when Lucy and Mina look at the book that shows sexual acts, Lucy states that "people can do that (sexual acts)". Mina then asks Lucy how she knows that people do those sexual acts, and Lucy replies "because I did that last night†¦..in my dreams." We assume that she did actually have a dream about the sexual acts, bu t what if she was not telling the truth? Lucy knew that no respectable woman would ever admit to have sexual relations out of wedlock in her time period. She may have been attempting to cover her reputation. It would appear that the most likely of these choices stated before is that God is unable to save the innocent. However, this is not to say that God is powerless. God maintains power over Dracula in several ways: Holy items, such as the crucifix, holy water, and holy wafers repel Dracula. The first time we see Dracula’s reaction is when Jonathan Harker is shaving. Dracula walks up behind Jonathan Harker and sees the crucifix. He is forced to stop looking at the crucifix and he (Dracula) say’s that "our ways are different than that of your England" and "you should not put your faith in such objects of deceit". We see, as Harker does that Dracula has a hatred of God.

Agricultural Equipment Business Essay

Agricultural Equipment Business Manufacturing, export and distribution opportunities in post-harvest equipment beckon entrepreneurs even as other farm products also hold great promise In the last decade, Buhler, a global manufacturer of grain milling, sorting and handling products, has been witnessing a geographical shift in demand for its products. While the US and Europe remained the mainstay for long, it is China and India that are now the demand hubs for its products. The company, which launched its India operations in 1992, has since expanded its facility in India and ramped up the workforce. Another equipment firm, Satake, a Japanese major, has been witnessing similar trend. But the presence of big firms such as Satake and Buhler has not had much effect on local manufacturing. Many small and medium enterprises operate at full capacity across the country. Take for instance, S P Khandelwal of S S Milling and Engineering. He sells grain cleaning and sorting equipment to flour mills, energy foods producers and snacks companies. He boasts of clients such as Bikanerwala, Priya Gold and Modi Flour Mill. It is the price factor that helps entrepreneurs such as Khandelwal survive the onslaught of the global majors. â€Å"Products sold by organized players are expensive while my products are low-cost,† he says. Farm equipment companies, both big and small, are fighting tooth and nail to grab the larger share of the lucrative India market, despite the fact that the agriculture sector’s share in the GDP has fallen over the years. This notwithstanding, the farm equipment sector, that is a key support for agriculture, has been growing at a brisk pace and is projected to touch $7. 9 billion by 2012, according to The Freedonia Group, a US-based market research firm. [pic] Growth Drivers A couple of factors are driving the growth of this sector. These are mechanization of agriculture, increase in contract farming, easy availability of farm loans at low interest rates, and migration of laborers from villages to cities. Mechanization of Indian agricultural has been a major booster. The continuous increase in the consumption of power for farm sector and the corresponding reduction in the use of animal and human power is a clear indication that more and more machines are being deployed. A study by KPMG, done for India Brand Equity Foundation (IBEF) throws up some interesting observations. It says the share of animals as the source of power for the agriculture sector declined sharply from 45% in 1971-72 to less than 10% in 2005-06.

The Importance of Censoring in The Catcher in the Rye by...

J.D. Salinger was an American author well known for his best seller The Catcher in the Rye, a considerably influential novel that portrayed the feelings of alienation that were experienced by adolescents in North America after World War II (J.D. Salinger Biography). Salinger’s work appeared in many magazines, including a series of short stories which inspired many new authors (J.D. Salinger Biography). His inspiration for Pencey Prep boarding school in The Catcher in the Rye stemmed from his own difficult education at a military school (Feeney). Salinger went through an emotional series of events after being drafted into the army during World War II, and it is evident that his story is very reflective of his own negative views of the†¦show more content†¦Its profanity has been declared in numerous states, as parents claim to be fearful that their children will be scarred by the events and foul language in the novel (Reiff). This fear has been elevated so much, in fact , that in the 1960s there were â€Å"teachers from Kentucky, Okla, Tulsa, and Louisville† that almost lost their jobs for assigning the novel to their classes. As a result of this, the book was prohibited in many school libraries (Dutra). Many people in North America also find the references to sexual acts and prostitution to be completely disturbing, and consider them to be pornographic and â€Å"encouraging of â€Å"premarital sex, homosexuality and perversion† (Reiff). This concern was much more prominent in the years leading up to the 1970s, when most of society was not open to this type of literature. Additionally, rebellion and deception are consistently displayed in Holden’s thoughts and actions, and his obsession with human intimacy may send the message to young people that sexual intercouse is an appropriate thing for a person to discuss and think about regularly. When accounting for all of this, it is difficult to argue that the The Catcher in the Ry e should not be censored. Despite the high amounts of foul language, deception, and vulgarity that many justify as reason enough to ban the novel, many critics argue that the story gives young readers thatShow MoreRelatedAnalysis Of Salinger s The Catcher s The Rye 2525 Words   |  11 PagesThe Catcher in the Rye (1951) by J.D Salinger is a book with a truly controversial history by being banned from bookstores, libraries, etc. during the time of its release and even now is very scarcely being brought back into the high school setting to be taught as part of the high school curriculum. While being confronted about reasons for being banned, protesters of this book give very vague arguments on why it should be banned such as â€Å"its a very filthy book,† or â€Å"its explicitly pornographic.†Read MoreEssay on Censorship and Book Banning1838 Words   |  8 Pagesconcerning religion, traditional family values, and economic and political positions. The texts that are chosen usually convey vague meaning and many times religious aspects are not mentioned. Is it our right to neglect students to learn the importance these issues have on our lives? Reasons for banning books are limitless. Some of these reasons are that the books contain content that is sexually explicit, nudity, profanity, and obscenity. The bizarre thing is that many books banned are