On a riskreturn basis rank order the following asset classes

Solution

12. Which of the active management strategies in the fundamental analysis category is most suitable for structuring an investment portfolio? Selecting individual stocks to buy or sell 13. The \"single-risk factor\" CAPM approach has more assumptions versus the \"multiple-risk factor\" APT approach. (Points : 1) True False List the 4 decisions involved or constructing an investment strategy 18. Why is the required rate of return the most dynamic or important variable used in valuation? 19. Here are the cash flow summaries for two companies – a manufacturer (MFR) and an online retailer: MFR ONLINE RETAILER Cash from Operations $75,000 $15,000 Cash from Financing 50,000 75,000 Cash from Investing <75,000> <25,000> Net Free Cash Flow $50,000 $65,000 QUESTION: Of the two companies, which one has higher “quality of cash flow?” Explain why. 20. What is the difference between the Direct Method and Indirect Method for calculating Cash Flow? Explain how the two methods are reconciled and also provide a brief description of each method. 1-List 3 reasons for diversifying a portfolio via international investing 2. What is the risk factor associated with international investing that potentially can also be viewed as a benefit [and hence, a 4th reason to invest internationally -- see question #1]. IF this factor is trending favorably for your investment portfolio, briefly explain why it is a benefit On a risk/return basis, rank order the following asset classes from lowest to highest based on the following data. (a) Small stocks: E(r) = 18.15% and standard deviation = 36.94%; (b) Large stocks: E(r) = 11.50% and standard deviation = 20.14%; (c) US Treasury bonds: E(r) = 5.45% and standard deviation = 8.06%; How would this rank order change if the return for each class [i.e., the E(r)] were each reduced by a 3% inflation factor?