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##### Seattle: FIN 540

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Question;Problem 5 page 21;Sally is reviewing the performance;of several portfolios in the family trusts. Trust A is managed by Wall Street;Investment Advisors and Trust B is managed by LaSalle Street Investment;Advisors. Both trusts are invested in a combination of stocks and bonds and;have the following returns;Trust;A Trust B;Year 1 15% 12%;Year 2 10 15;Year 3 -4 -2;Year 4;25;20;Year 5 -8 -5;a.;Calculate the annualized geometric and arithmetic returns over this 5-year;period.b. Which;manager performed the best, and is there a significant enough difference;for Sally to move her money to the winning manager?c.;Explain the difference between the geometric and arithmetic returns.Problem 5 page 72;You sell 100 shares of Norton;Corporation short. The price of the stock is $60 per share. The margin;requirement is 50 percent.;a. How;much is your initial margin?b. If;stock goes down to $42, what is your percentage gain or loss on the;initial margin (equity)?c. If;stock goes up to $67.50, what is your percentage gain or loss on the;initial margin (equity)?d. In;part c, if the minimum margin standard is 30 percent, will you be;required to put up more margin? (Do the additional necessary calculations;to answer this questionProblem 12 Page 73;Assume the following five companies are used in computing an;index;Company;Shares outstanding Base period jan 1, 1984 current period December 31, 2007 marketprice;A;6,000 $;6;$ 12;B;2,000;5;18;C;10,000 8;40;D;1,000;20;10;E 4,000;15;32;a. If;the index is price weighted, what will be the value of the index on;December 31, 2007? (Take the average price on December 31, 2007, and divide;by the average price on January 1, 1984, and multiply by 100.)b. If;the index is value weighted, what will be the value of the index on;December 31, 2007? (Take the total market value on December 31, 2007, and;divide by the total market value on January 1, 1984, and multiply by 100.);c.;Explain why the answer in part b is different from the answer in;part a.

Paper#51535 | Written in 18-Jul-2015

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