HND Business (HS/BS) Award Leader: Jill Gollins Tel: 01902 323962 Email: J.Gollins@wlv.ac.uk Table of Contents Welcome to University of Wolverhampton Business School 2 Introduction 2 Programme Outcomes 3 Structure of the HND Business Award 4 Core Modules Descriptions: Year 1 5 BE1002 Principles of International Business 5 BE1010 Quantitative Techniques for Business(HND) 6 BE1011
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that the spot rate in one month time is US$1.68. Question 2 What types of risk are present in a portfolio? Which type of risk remains after the portfolio has been diversified? Question 3 How, according to portfolio theory is the risk of the portfolio measured exactly? Question 4 Discuss about the integration of market worldwide and its impact on international portfolio diversification. Question 5 Giri Lyer is a European analyst and strategist
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that determine rates of return (discount rates) in the capital markets. We are particularly interested in the relationship between risk and rates of return. We look at risk both in terms of the riskiness of an individual security and that of a portfolio of securities. CHAPTER OUTLINE I. Expected Return Defined and Measured A. The expected benefits or returns to be received from an investment come in the form of the cash flows the investment generates. B. Conventionally, we
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MODELS Answers to Questions 1. It can be shown that the expected return function is a weighted average of the individual returns. In addition, it is shown that combining any portfolio with the risk-free asset, that the standard deviation of the combination is only a function of the weight for the risky asset portfolio. Therefore, since both the expected return and the variance are simple weighted averages, the combination will lie along a straight line. 2. Expected Rate of Return
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Modern portfolio theory From Wikipedia, the free encyclopedia "Portfolio analysis" redirects here. For theorems about the mean-variance efficient frontier, see Mutual fund separation theorem. For non-mean-variance portfolio analysis, see Marginal conditional stochastic dominance. Modern portfolio theory (MPT) is a theory of finance which attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully
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According to modern portfolio theory, the idea that investors with different indifference curves will hold the same portfolio of risky securities is a result of: (a) diminishing marginal utility of income (b) covariance (c) the separation theorem (d) the normal distribution assumption Within the framework of modern portfolio theory, if portfolios A and B have the same return but portfolio A has less risk, then: (a) portfolio B is inefficient (b) portfolio A is inefficient (c) portfolio B cannot exist
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The return from holding an investment over some period of time is simply any cash payments received due to ownership, plus the change in market price usually expressed as a percent of the beginning market price of the investment. Return comes to you mainly from two sources – income or dividend plus any price appreciation (capital gain or loss) Dt + ( Pt – Pt-1) R = Pt-1 Suppose, you buy for Tk. 100 a security that would pay Tk. 7 in cash to
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asset be 0.25, and the investor holds an equally weighted portfolio of these assets. How many of such assets should an investor hold so that the variance of her portfolio is zero? (b) If the correlation was 0.02 can the investor ever achieve a zero variance? (c) For the case that the correlation is 0.4, and the investor holds an equally weighted portfolio of 10 assets, calculate the amount of unsystematic and systematic risk in her portfolio. 2. (Diversification over time). Suppose an investor invests
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and 1.2 % respectively a. 18 %, 14.4% b. 15%, 14.4% c. 15%, 4.16% d. 18 %, 4.16% 4. Efficient frontier is the plot of efficient portfolios by combining risky assets and risk free assets a. True b. False 5. The portfolio on efficient frontier which has least risk is a. Market Portfolio b. Efficient Portfolio c. Minimum Variance Portfolio d. None 6. Risk that cannot be diversified is a. Systematic Risk b. Non Diversifiable Risk c. Market Risk d. All the
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lie on the SML (not below or above the SML as overpriced or underpriced securities, respectively). b) Other things equal, diversification is most effective when securities' returns are uncorrelated. (1 point) FALSE: The greatest reduction of portfolio risk (=the goal of diversification) results from negative correlation among securities. Financial Management Mid-Term exam, 13/10/2012 1 c) Relative to European puts, otherwise identical American put options are less valuable. (1 point) FALSE:
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