Wednesday, November 25, 2020

#531 You are working as a portfolio associate and your

You are working as a portfolio associate and your - Business Statistics

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ChemistryExplain “#531 You are working as a portfolio associate and your in Business Statistics, Statistics for business and economics, Small business statistics
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Free Chegg Question

You are working as a portfolio associate and your manager assigned task to find out which investment option is feasible for existing portfolio. All of the investment options are riskier than market however still manager wants to optimize its risk in given investment options.

Requirements:

1. Calculate Average of each of the investment option.

2. Calculate the Risk of each of the investment option.

3. Calculate the Co-efficient of Variation of each investment option.

4. Calculation of correlation each of the investment option

5. Calculate Beta of each of the investment option.

6. Give your conclusion or recommendation which investment option is best for you in comparison to least risky

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Free Chegg Answer

Average or Mean Total of term Number of term

\textbf{Risk or Standard Deviation} = \sqrt{\frac{Total of (deviation)^{2}}{Number of terms}}

Deviation Term – Average

Coefficient of Variation Standard Deviation Average/mean

Correlation between Market and Security Covariance between Market and Security Standard Deviation of market * Standard Deviat

\textbf{Covariance between market and Security} = \frac{\textit{Total of (market deviation * Security Deviation)}}{\textit{Total Number of terms}}

Beta = \textit{Correlation} * \frac{\textit{Standard Deviation of Security}}{\textit{Standard Deviation of Market}}

Years с 1 2 3 39900.00 4 Market A M m =M-X m^2 А a = A-X a2 39400.00 -746.00 556516.00 70.00 -1.60 2.5600 39800.00 -346.00 11

A B C D E F H J K L M 1 2 Years Market А B 3 M m =M-X m^2 А a = A-X a12 ma b=B-X b^2 m*b 4 1 39400 =C4-$C$15 =D4^2 70 =F4-$F$

A N 0 P Q R S T U 1 2 3 4 5 6 7 8 9 с с c=C-X ^2 mic 10 =N4-$N$15 =04^2 =D4*04 10.5 =N5-$N$15 =0542 =D5*05 11.2 =N6-$N$15 =06

Note While calculating average of Data A and D there is some rounding off error after putting average formula, so put value manually.

6. In comparison best investment option is A.

All have different return and Risk so we decide on the basis of Cofficient of Variation . Lower the Coefficient of variation is better. In option A it is lower in comparison to B, C and D.

Coefficient of Variation denotes how much risk involved in scurity in earning income of 1 Rupee. It gives risk per unit of return.

If we compare all from market then market has lower COV.

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