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Ashford bus405 entire course (principles of investments)

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Ashford bus405 entire course (principles of investments)

  1. 1. ASHFORD BUS405 Entire course (Principles of Investments) PLEASE DOWNLOAD HERE Week OneReadings Chapter 1: A Brief History of Risk and Return Chapter 2: The Investment Process Chapter 3: Overview of Security Types Chapter 4: Mutual FundsDiscussionsWeek 1 – DQ1 - Blume’s Formula, Allocation, and Selection - BUS405 Principles of InvestmentsFrom Chapter 1, answer Concept Question 5: What is Blume’s formula? When would you want to use it inpractice? Also, from Chapter 2, answer Concept Question 4: What is the difference between assetallocation and security selection? Remember to complete all parts of the questions and support youranswers with examples from the text and other resources.Week 1 – DQ2 - Money Market Funds - BUS405 Principles of InvestmentsFrom Chapter 4, complete Problem 4: The Aqua Liquid Assets Money Market Mutual Fund has a NAV of $1per 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 thequestion, show your work, and report the results of your analysis.QuizWeek 1 Quiz - BUS405 Principles of InvestmentsAssignmentWeek 1- Assignment - Annualized Returns – Chapter 3 problem 18 - BUS405 Principles of InvestmentsComplete problem 18 in Chapter 3 (shown below) and submit to the instructor. Show your work to findthe annualized return for each of the listed share prices. Write a 100 word analysis of the process tocalculate these annualized returns.Suppose you have $28,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which iscurrently selling for $40 per share. You also notice that a call option with a $40 strike price and six monthsto maturity is available. The premium is $4.00. MMEE pays no dividends. What is your annualized returnfrom these two investments if, in six months, MMEE is selling for $48 per share? What about $36 pershare? Week TwoReadings
  2. 2. Chapter 5: The Stock Market Chapter 6: Common Stock Valuation Chapter 7: Stock Price Behavior and Market Efficiency Chapter 8: Behavioral Finance and the Psychology of InvestingDiscussionsWeek 2 – DQ1 - Primary and Secondary Markets - BUS405 Principles of InvestmentsComplete Concept Question 1 from Chapter 5: If you were to visit your local Chevrolet retailer, there isboth a primary and a secondary market in action. Explain. Is the Chevy retailer a dealer or a broker?Remember to complete all parts of the question and support your answers with examples from the textand other resources.Week 2 – DQ2 - Contrarian Investing - BUS405 Principles of InvestmentsComplete Concept Question 9 from Chapter 8: What does it mean to be a contrarian investor? How woulda contrarian investor use technical analysis? Post your answers to the discussion board. Remember tocomplete all parts of the question and support your answers with examples from the text and otherresources.QuizWeek Two Quiz - BUS405 Principles of InvestmentsAssignmentWeek 2 – Assignment - Abbott Laboratories Problem - BUS405 Principles of InvestmentsAfter reading the Value Line figures and information on Abbott Laboratories in the Questions and Problemssection of Chapter 6 (just before Problem 27), complete Problems 27, 28, 29, 30, and 31 and submit toyour instructor. Show your calculations and in your response to problem 31 write a 100 to 200 worddefense of your position as to the value of Abbott Laboratories stock at its current price of $50 per share.27. What is the sustainable growth rate and required return for Abbott Laboratories? Using these values,calculate the 2010 share price of Abbott Laboratories Industries stock according to the constant dividendgrowth model.28. Using the P/E, P/CF, and P/S ratios, estimate the 2010 share price for Abbott Laboratories. Use theaverage stock price each year to calculate the price ratios.29. Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Usethe clean surplus relationship to calculate the share price for Abbott Laboratories with the residual incomemodel.30. Use the information from the previous problem and calculate the stock price with the clean surplusdividend. Do you get the same stock price as in the previous problem? Why or why not?31. Given your answers in the previous questions, do you feel Abbott Laboratories is overvalued orundervalued at its current price of around $50? At what price do you feel the stock should sell? Week ThreeReadings Chapter 9: Interest Rates Chapter 10: Bond Prices and YieldsDiscussions
  3. 3. Week 3 – DQ1 - Forward Interest Rates - BUS405 Principles of InvestmentsComplete Problem 16 from the Questions and Problems section of Chapter 9: According to the pureexpectations theory of interest rates, how much do you expect to pay for a one-year STRIPS on February15, 2011? What is the corresponding implied forward rate? How does your answer compare to the currentyield on a one-year STRIPS? What does this tell you about the relationship between implied forward rates,the shape of the zero coupon yield curve, and market expectations about future spot interest rates?Remember to complete all parts of the questions, and report the results of your analysis.Week 3 – DQ2 - Bond Prices versus Yields - BUS405 Principles of InvestmentsComplete Concept Question 9 of Chapter 10: (a) What is the relationship between the price of a bond andits YTM? (b) Explain why some bonds sell at a premium to par value, and other bonds sell at a discount.What do you know about the relationship between the coupon rate and the YTM for premium bonds? Whatabout discount bonds? For bonds selling at par value? (c) What is the relationship between the currentyield and YTM for premium bonds? For discount bonds? For bonds selling at par value? Remember tocomplete all parts of the questions, and report the results of your analysis.QuizWeek 3 Quiz - BUS405 Principles of InvestmentsAssignmentWeek 3 – Assignment – Bootstrapping Chapter 10 Problem 31 - BUS405 Principles of InvestmentsComplete problem 31 of Chapter 10 (shown below), and submit to your instructor. Show your calculationsand the algebraic manipulation of the price equation for the bond. In addition to solving the problem, writea 100 to 200 word essay on the term structure of fixed income securities.One method used to obtain an estimate of the term structure of interest rates is called bootstrapping.Suppose you have a one-year zero coupon bond with a rate of r1 and a two-year bond with an annualcoupon payment of C. To bootstrap the two-year rate, you can set up the following equation for the price(P) of the coupon bond: P=C_1/(1+r_1 )+(C_2+Par value)/(1+r_2 )^2Because you can observe all of the variables except r2, the spot rate for two years, you can solve for thisinterest rate. Suppose there is a zero coupon bond with one year to maturity that sells for $949 and atwo-year bond with a 7.5 percent coupon paid annually that sells for $1,020. What is the interest rate fortwo years? Suppose a bond with three years until maturity and an 8.5 percent annual coupon sells for$1,029. What is the interest rate for three years? Week FourReadings Chapter 11: Diversification and Risky Asset Allocation Chapter 12: Return, Risk, and the Security Market Line Chapter 13: Performance Evaluation and Risk ManagementDiscussions 1. Week 4 – DQ1 – Expected Returns and Deviation - BUS405 Principles of Investments Complete Problems 1, 2, and 3 from the Questions and Problems section of Chapter 11 (shown below). Remember to complete all parts of the questions, and report the results of your analysis. a. Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone. StateofEconomy Probability of State of the Economy Security Return if State Occurs Recession .30 -8%
  4. 4. Normal .40 13 Boom .30 232. b. Using the information in the previous question, calculate the standard deviation of returns. c. Repeat Questions 1 & 2 assuming that all three states are equally likely.3. Week 4 – DQ2 – Portfolio Weights - BUS405 Principles of Investments Complete Problem 10 from the Questions and Problems section of Chapter 12: A stock has a beta of .9 and an expected return of 9 percent. A risk-freeassetcurrentlyearns 4 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of .5, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 8 percent, what is its beta? d. If a portfolio of the two assets has a beta of 1.80, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain. Quiz Week 4 Quiz - BUS405 Principles of Investments Assignment Week 4 – Assignment – Performance Metrics Chapter 13 Problem 22- BUS405 Principles of InvestmentsComplete Problem 22 in the Questions and Problems section of Chapter 13 (shown below). When you pick the best choice for your portfolio, defend your decision in a 100 - 200 word essay. You have been given the following return information for two mutual funds (Papa and Mama), the market index, and the risk-free rate. Year PapaFund MamaFund Market Risk-Free 2008 -12.6% -22.6 -24.5% 1% 2009 25.4 18.5 19.5 3 2010 8.5 9.2 9.4 2 2011 15.5 8.5 7.6 4 2012 2.6 -1.2 -2.2 2 Calculate the Sharpe ratio, Treynor ratio, Jensen’s alpha, information ratio, and R-squared for both funds and determine which is the best choice for your portfolio. Week Five Readings Chapter 14: Futures Contracts Chapter 15: Stock Options Discussions Week 5 – DQ1 – Hedging with Futures- BUS405 Principles of Investments
  5. 5. Complete Concept Question 7 from Chapter 14: The town of South Park is planning a bond issue insix months and Kenny, the town treasurer, is worried that interest rates may rise, therebyreducing the value of the bond issue. Should Kenny buy or sell Treasury bond futures contracts tohedge the impending bond issue? Remember to complete all parts of the question and supportyour answers with examples from the text and other resources.Week 5 – DQ2 – Option Strategies- BUS405 Principles of InvestmentsComplete Concept Question 12 from Chapter 15: Recall the options strategies of a protective putand covered call discussed in the text. Suppose you have sold short some shares of stock. Discussanalogous option strategies and how you would implement them. (Hint: They’re called protectivecalls and covered puts.) Remember to complete all parts of the question and support your answerswith examples from the text and other resources.Final ProjectWeek 5 – Final Project – Construct a well-diversified portfolio - BUS405 Principles of InvestmentsThe student will construct a well-diversified portfolio using an initial investment stake of $50,000(the portfolio should use 95% of the fund, but they may not use more than $50,000). The studentmay include stocks, common or preferred; bonds, corporate or U.S. Treasury bonds; mutual funds;and futures contract or options. The student will use the closing prices from the first day of theclass to determine the price of each issue. Only whole lots of any issues may be acquired, that isno less than 100 shares of common or preferred stock; no less than 5 corporate bonds or $10,000for U.S. Treasury Bonds; no fewer than the minimum required investment for any mutual fund;and no fewer than 5 contracts for any option or futures position. The settlement date will be thefirst day of Week 3. The student does not have to use all of the above mentioned securities, butthey must use more than one class. Transaction costs are ignored in the creation of the portfolio.

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