Please solve the following problems:Chapter 6: Mini Case study: a. through k. only (p. 291 –...

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Please solve the following problems:Chapter 6: Mini Case study:  a. through k. only (p. 291 – 293)Chapter 8: Mini Case study: a. through d.  and f. only (p. 369 – 370)Please use the following information to login to the course textbook:Login:  XXXXXXXXXXPass: NJVmC7uFLvGpV9S Here is the case study:chegg.com/homework-help/corporate-finance-6th-edition-chapter-6-problem-1mc-solution XXXXXXXXXXHere is the 2nd case study:https:www.chegg.com/homework-help/corporate-finance-6th-edition-chapter-8-problem-1MC-solution XXXXXXXXXXThe answers are there, I just need it copied into a document.

Rochak · Accepted Answer

Chapter 6 – Mini Case
Answer a: Investment returns are the return the investment is generating, which mean the profit the investment generates is the investment return.
Return on Investment = ($1,060/$1,000) - 1
                                         = 0.06 (or 6%)
Answer b: 
Probability Distribution for the 5 scenarios: 
Probability distribution of infinite scenarios:
Answer c:
Rate of return on the bond = (0.10*-14%) + (0.20*-4%) + (0.40*6%) + (0.20*16%) + (0.10*26%) 
= 6.00%
Answer d:
Stand Alone Risk = 14.14%
Answer e:
Standard Deviation of Blandy = 23.90%
Answer f:
	
	Historical Returns
	
	Year
	Blandy
	Gourmange
	Portfolio
	              1 
	26.00%
	47.00%
	31.25%
	              2 
	15.00%
	-54.00%
	-2.25%
	              3 
	-14.00%
	15.00%
	-6.75%
	              4 
	-15.00%
	7.00%
	-9.50%
	              5 
	2.00%
	-28.00%
	-5.50%
	              6 
	-18.00%
	40.00%
	-3.50%
	              7 
	42.00%
	17.00%
	35.75%
	              8 
	30.00%
	-23.00%
	16.75%
	              9 
	-32.00%
	-4.00%
	-25.00%
	            10 
	28.00%
	75.00%
	39.75%
Average Return of the portfolio = 7.10%
Standard Deviation of the Portfolio = 21.02%
Portfolio of the two stocks has a risk which is lower than the individual stock because diversification decreases the risk, which cannot happen in individual stocks
Answer g:
Correlation is a measure which tells us how does the securities which are grouped together, move in relation to each other. For example, two stock which move together in the same direction are told to be perfectly correlated and when one the stock is going up and the other stock is going down it is said to be negatively correlated.
Correlation between the two stocks = 0.11
Yes, correlation explains a lot about why the standard deviation of the portfolio was less, because when the correlation is close to zero it means that the stocks are not correlated and this means that one stock goes up the other can move in any direction and this excludes the risk which is with individual stock, therefore the standard deviation of the portfolio is less.
Answer h:

Please solve the following problems: Chapter 6: Mini Case study: a. through k. only (p. 291 – 293) Chapter 8: Mini Case study: a. through d. and f. only (p. 369 – 370) Please use the following...

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