BUS 405 Week 1 Assignment Annualized Returns Chapter 3 Problem 18

Topics: Investment, Stock market, Stock Pages: 3 (700 words) Published: October 27, 2014

This file includes BUS 405 Week 1 Assignment Annualized Returns Chapter 3 Problem 18
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Week One

Week 1 – DQ1 - Blume’s Formula, Allocation, and Selection   
From Chapter 1, answer Concept Question 5: What is Blume’s formula? When would you want to use it in practice? Also, from Chapter 2, answer Concept Question 4: What is the difference between asset allocation and security selection?  Remember to complete all parts of the questions and support your answers with examples from the text and other resources. 

Week 1 – DQ2 - Money Market Funds 
 
From Chapter 4, complete Problem 4: The Aqua Liquid Assets Money Market Mutual Fund has a NAV of $1 per share. During the year, the assets held by this fund appreciated by 2.5 percent. If you had invested $50,000 in this fund at the start of the year, how many shares would you own at the end of the year? What will the NAV of this fund be at the end of the year? Why?  Remember to complete all parts of the question, show your work, and report the results of your analysis. 

Assignment

Week 1- Assignment - Annualized Returns – Chapter 3 problem 18 

Complete problem 18 in Chapter 3 (shown below) and submit to the instructor.  Show your work to find the annualized return for each of the listed share prices.  Write a 100 word analysis of the process to calculate these annualized returns.

Suppose you have $28,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $40 per share. You also notice that a call option with a $40 strike price and six months to maturity is available. The premium is $4.00. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $48 per share? What about $36 per share?

Week Two

Readings

  Chapter 5: T...

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