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##### FIN 631 ? Security Analysis & Portfolio Management

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Question;FIN;631 ? Security Analysis & Portfolio Management;Module 2: Sample Problems ? To Help;Practice & Prepare for Midterm and Final Exams;Based upon Chapters 8, 9 and 10 from your textbook;1) Suppose the risk free rate (rfr) = 5%, average market return (rm);= 10%, and the required or expected rate of return E(r) = 12% for TNG stock.;(a) Calculate the Beta (?) for TNG.;(b) If TNG?s Beta (?) = 2.0, what would be TNG?s new required or;expected rate of return (r)?2) An investor desires to own a stock whose price moves no greater;than 50% versus the overall market. Given that ABC stock has a required;or expected rate of return of 15%, the average market return is 11% and the;interest yield on 10-year US Treasury Bonds is 4%, should the investor purchase;ABC? Show your work to explain why or why not.;="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>3) Using the company you have selected for your current event;paper [or any publicly traded company of your choice], construct or set up an;equation to calculate the expected or required rate of return for the company;using the APT model. You may use hypothetical or estimated numbers to;complete this conceptual problem. HINT:The goal here is for you to;assess the relative significance of each of the factors that will affect the;required or expected rate of return specific to your company and demonstrate;you understand how this equation is actually used for investment analysis.4) ?If a company?s total assets are financed 55% by debt, this;indicates a high level of financial risk.? Briefly evaluate the validity;of this statement.;="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>5) ?A company with a low profit margin [net income as a percent of;total sales] can still translate this into a high return on assets within its;peer group.? Briefly evaluate the validity of this statement.;="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>="margin-top:.1pt,margin-right:0cm,margin-bottom:.1pt,margin-left:0cm,>

Paper#50382 | Written in 18-Jul-2015

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