Finance for Managers - Historical Average Rate - Accounting and Finance Assignment Help

Assignment Task:

This assignment has a 30% weighting in your overall mark for this unit and focuses on content from Week 3. It will be marked out of 30. Marks will be allocated as indicated in the rubric below. Your total assignment submission should not exceed 1,500 words, excluding cover sheet and reference list. 

Overall, the assignment requires you to conduct a risk and return analysis using historical market data. Prepare your data prior to performing the risk and return calculations: 

• Choose one company from Table 1 below. This company will be your case company for this assessment and Task 1 of the next assessment

Tasks for Case Study 1 

a) Using the data above, calculate: 

(1) The historical monthly rates of return for the market index only (monthly rates of return for the companies are given); and 

(2) The historical average rate of return and standard deviation of returns for: 

i) your case company; 

ii) the reference company; 

iii) the market index; and 

iv) a portfolio consisting of a 40% investment in your case company and a 60% investment in the reference company. 

b) Calculate expected returns and portfolio beta as follows: 

(1) Use CAPM to estimate the expected return as at 29 May 2020 for the shares of: 1) your case company; and 2) the reference company. To do this, use the yield to maturity on that date of a 10-year Australian Government bond as a proxy for the risk-free rate, assume the market risk premium is 6% and use your chosen case company’s beta in July 2020. (Data to be collected from the first link in the Web Links section of the unit site.) Assume that the reference company’s beta is -0.40.

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