## Four Analysts Cover The Stock Of Fluorine Chemical. One Forecasts A 5 Return For The Coming Year

An analyst predicted last year that the stock of Logistics, Inc., would offer a total return of at least 10% in the coming year. At the beginning of the year, the firm had a stock market value of \$ 10 million. At the end of the yeax^ it had a market value of \$ 12 million even though it experienced a loss, or negative net income, of \$2.5 million. Did the analyst's prediction prove correct? Explain using the values for total annual return.

Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year A second expects the return to be negative 5%. A third predicts a 10% return. A fourth expects a 3% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign probabilities of being correct of 35%, 5%, 20%, and 40%, respectively, to the analysts' forecasts. Given these probabilities, what is Fluorine Chemical's expected return for the coming year?

The expected annual returns are 15% for investment 1 and 12% for investment 2. The standard deviation of the first investment's return is 10%; the second investment's return has a standard deviation of 5%. Which investment is less risky based solely on standard deviation? Which investment is less risky based on coefficient of variation? Which is a better measure given that the expected returns of the two investments are not rhe same?

Your portfolio has three asset classes. U.S. government T-biUs account for 45% of the portfolio, large-company stocks constitute another 40%, and small-company stocks make up the remaining 15%. If the expected returns are 3.8% for the T-bills, 12.3% for the large-company stocks, and 17.4% for the small-company stocks, what is the expected return of the portfolio?

lifcSfcf You wish to calculate the risk level of your portfolio based on its beta. The five stocks in the portfolio with their respective weights and betas are shown below. Calculate the beta of your portfolio.

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