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Essay / Research Paper Abstract
This 25 page paper answers a range of investment question posed by the student, all of which involve calculations. The first few look at bond yields and bond prices at changing interest rates, the investment decisions are considered looking at incremental cash flows and terminal cash flows, the final questions ass investment choices using the net present value model, also referred to as NPV, and the internal rate of return referred to as IRR.
Page Count:
25 pages (~225 words per page)
File: TS14_TEquestinv1.rtf
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Unformatted sample text from the term paper:
we can consider the return in terms of the average return over the period as well as placing that into a finance value. This gives us the following.
Year Stock A a) If 100 invested Stock B a) If 100 invested Stock C a) If 100 Invested 2007 10 110 10 110 10 110 2008 13 124 11
122 14 125 2009 15 143 8 132 10 138 2010 14 163 12 148 11 153 2011 16 189 10 162 9 167 2012 14 215 15 187 9
182 2013 12 241 15 215 10 200 A) Average return 13.99% 11.80% 10.48% b) Standard deviation 1.988% 2.637% 1.718% A. The return has
been calculated on an initial investment of 100 at the beginning of 2007. this gives us 241 for stock A, 215 for stock B and 200 for stock C. In
terms of the return we have calculated this with the following equation, Compound annual growth rate = (ending value/beginning value)(1/Number of years) -1. B. The second task is to
calculate the standard deviation. This may be seen as 1.988% for stock A, 2.637% for stock B and 1.718% for stock C. C and D. The next question is to
look at the returns expected from a range of portfolios. We will assume that the portfolio is equally spread. If we do this we get the following for the return
and also the standard deviation Return Average compound rate of return Standard deviations AB 228.10 12.89% 2.442 AC 220.73 12.23% 2.369 BC 207.48 11.14% 2.219 E If we
consider Jane as a conservative investor then she may want to look at safety as well as return. It appears that the best return is if stock A also is
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