Project on portfolios and cash flows

$10,000 is 

invested in a single asset that returns 7 percent annually for 

twenty-five years and $2,000 is placed in five different 

investments, earning returns of 100 percent, 0 percent, 5 percent, 

10 percent, and 12 percent, respectively, over the twenty-year 

time frame. For each of the questions below, begin with the 

original scenario presented in the table: 

a. Experiment with the return on the fifth asset. How low can the 

return go and still have the diversified portfolio earn a higher 

return than the single-asset portfolio? 

b. What happens to the value of the diversified portfolio if the 

first two investments are both a total loss? 

c. Suppose the single-asset portfolio earns a return of 8 percent 

annually. How does the return of the single-asset portfolio 

d. Assume that Asset 1 of the diversified portfolio remains a 

total loss (–100% return) and asset two earns no return. 

Make a table showing how sensitive the portfolio returns are 

to a 1-percentage-point change in the return of each of the 

other three assets. That is, how is the diversified portfolio’s 

value affected if the return on asset three is 4 percent or 6 

percent? If the return on asset four is 9 percent or 11 

percent? If the return on asset five is 11 percent? 13 percent? 

How does the total portfolio value change if each of the three 

asset’s returns are one percentage point lower than in the 

table? If they are one percentage point higher? 

e. Using the sensitivity analysis of (c) and (d), explain how the 

two portfolios differ in their sensitivity to different returns on 

their assets. What are the implications of this for choosing 

between a single asset portfolio and a diversified portfolio? 

fn2640_project (1).xlsx 

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!