# Investment Calculation

## Sheet2

 What is the Sharpe ratio, Treynor ratio, and Jensen’s alpha for each portfolio? (Negative values should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Do not round intermediate calculations. Round your Sharpe ratio answers and Treynor ratio answers to 5 decimal places and Jensen’s alpha answers to 2 decimal places. Omit the “%” sign in your response.) Portfolio RP σP βP Portfolio Sharpe Ratio Treynor Ratio Jensen’s Alpha Cannot figure out the Treynor Jensen’s or Market X 16.5 % 37 % 1.40 X % Y 15.5 32 1.15 Y % Z 7.4 22 .70 Z % Market 11.8 27 1.00 Market % Risk-free 5.2 0 0

## Sheet3

 A stock has an annual return of 13 percent and a standard deviation of 61 percent. What is the smallest expected loss over the next year with a probability of 5 percent? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) Smallest expected loss %

## Sheet4

 A stock has an annual return of 10.4 percent and a standard deviation of 41 percent. What is the smallest expected gain over the next year with a probability of 1 percent? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) Smallest expected gain %

## Sheet5

 Problem 13-19 Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2008 –20.60 % –39.5 % 1 % 2009 25.1 21 3 2010 13.9 13.9 2 2011 7.6 8.8 4 2012 –2.10 –5.2 2 What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Sharpe ratio Need answer Treynor ratio Need answer

## Sheet6

 Problem 13-20 Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .95. Year Fund Market Risk-Free 2008 –19.40 % –37.5 % 1 % 2009 25.1 20.8 4 2010 13.7 13.3 2 2011 7.2 8.4 6 2012 –1.98 –4.2 2 Calculate Jensen’s alpha for the fund, as well as its information ratio. (Do not round intermediate calculations. Round your Jensen’s alpha answer to 2 decimal places and Information ratio answer to 4 decimal places. Omit the “%” sign in your response.) Jensen’s alpha % Need Answer Information ratio Need Answer

## Sheet7

 Problem 17-3 You are given the following information for Smashville, Inc. Cost of goods sold: \$ 234,000 Investment income: \$ 2,600 Net sales: \$ 397,000 Operating expense: \$ 92,000 Interest expense: \$ 7,400 Dividends: \$ 12,000 Tax rate: 40 % Current liabilities: \$ 20,000 Cash: \$ 21,000 Long-term debt: \$ 22,000 Other assets: \$ 42,000 Fixed assets: \$ 131,000 Other liabilities: \$ 5,000 Investments: \$ 46,000 Operating assets: \$ 47,000 Calculate the gross margin, the operating margin, return on assets, and return on equity. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) Gross margin % Operating margin % Return on assets % Cannot figure this one out? Return on equity % Cannot figure this one out?

## Sheet8

 Problem 17-6 The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes): Income Statement Sales \$ 6,400 Costs (4,480 ) Net income \$ 1,920 Balance Sheet Assets \$ 19,200 Debt \$ 9,900 Equity 9,300 Total \$ 19,200 Total \$ 19,200 Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be \$7,808. What is the external financing needed? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole dollar. Omit the “\$” sign in your response.) EFN \$ Cannot figure out EFN?

## Sheet9

 Problem 17-11 The most recent financial statements for Martin, Inc., are shown here: Income Statement Sales \$ 29,500 Costs -18,000 Taxable income \$ 11,500 Taxes (34%) -3,910 Net income \$ 7,590 Balance Sheet Assets \$ 82,600 Debt \$ 30,000 Equity 52,600 Total \$ 82,600 Total \$82,600 Assets and costs are proportional to sales. Debt and equity are not. A dividend of \$1,165 was paid, and Martin wishes to maintain a constant payout ratio. Next year’s sales are projected to be \$33,630. What is the external financing needed? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the “\$” sign in your response.) EFN \$ Cannot figure out EFN?

## Sheet10

 Problem 17-14 Amounts are in thousands of dollars (except number of shares and price per share): Kiwi Fruit Company Balance Sheet Cash and equivalents \$ 480 Operating assets 760 Property, plant, and equipment 3,000 Other assets 165 Total assets \$ 4,405 Current liabilities \$ 980 Long-term debt 1,375 Other liabilities 175 Total liabilities \$ 2,530 Paid in capital \$ 395 Retained earnings 1,480 Total equity \$ 1,875 Total liabilities and equity \$ 4,405 Kiwi Fruit Company Income Statement Net sales \$ 6,700 Cost of goods sold (4,900 ) Gross profit \$ 1,800 Operating expense (530 ) Operating income \$ 1,270 Other income 160 Net interest expense (200 ) Pretax income \$ 1,230 Income tax (250 ) Net income \$ 980 Earnings per share \$ 1 Shares outstanding 980,000 Recent price \$ 43.5 Kiwi Fruit Company Cash Flow Statement Net income \$ 980 Depreciation and amortization 220 Increase in operating assets (100 ) Decrease in current liabilities (112 ) Operating cash flow \$ 988 Net (purchase) sale of property \$ 200 Increase in other assets (73 ) Investing cash flow \$ 127 Net (redemption) issuance of LTD \$ (168 ) Dividends paid (182 ) Financing cash flow \$ (350 ) Net cash increase \$ 765 Calculate the price-book, price-earnings, and price-cash flow ratios for Kiwi Fruit. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price-book ratio Need Answer Price-earnings ratio Need Answer Price-cash flow ratio Need Answer

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