This website uses cookies to ensure you have the best experience. Learn more

Beta Case Study

905 words - 4 pages

Investment Management

BMC Case Study

Student Name: Junwei Wang
Student ID: 11516655

Class Time: 6 p.m. – 9 p.m. Tuesday
Lecturer: Wing Bui

Table of content
Q 1. 1
Q 2. 1
Q 3. 2
Q 4. 2
Q 5. 3

Beta Management Company
I. Case Background
Beta Management Company was founded in 1988 by Ms. Wolfe. Beta Management Company is a small investment management company based in a Boston suburb. Beta Management Company was successful in 1989 ...view middle of the document...

Unlike before, Beta increase the equity exposure from 50% to 80%. Beta used to have 1% to 50% debt and 50% to 99% equity. Now, the portfolio will become as 20% debt and 80% equity. And also based on the performance of the two stocks, they are both unsteady stocks which mean that the risk of the Beta’s portfolio will be increased. However, we can also found that the return will be much higher.
C. Ms. Wolfe is a contrarian investor. Base on the performance of the two stocks, these two stocks were unsteady and the losses rate is much higher than the return rate.

a. California R.E.I.T. was a real estate investment trust. Their stock had been badly damaged by the “World series” earthquake of 1989. Base on the Figure 1, it is easily found that the performance of the stock is volatile. Although the trend is similar with the index trend, California R.E.I.T. was still in a bad position.
b. Brown Group Inc. was one of the largest manufacturers and retailers of branded footwear, and had been undergoing a major restructuring program since 1989. The stock performed steady and positive. However, there was a significant drop in late 1989 and late 1990.
a. The average return of California R.E.I.T. is -2.27% and the average return of Brown Group Inc. is -0.67%. The standard deviation of California R.E.I.T. is 0.092307 and the standard deviation of Brown Group Inc. is 0.081668. The standard deviation of S&P index is 0.46036. Compare with SP500, California more risker.
b. In portfolio SPC, the...

Other Papers Like Beta Case Study

Alpha And Beta Essay

1501 words - 7 pages unsystematic risk has been eliminated), and because a diversified portfolio's main source of risk is market risk (or systematic risk), beta is an appropriate measure of that risk. Alpha is used to determine by how much the realized return of the portfolio varies from the required return, as determined by CAPM. The formula for alpha is expressed as follows: |α = Rp – [Rf + (Rm – Rf) β

Finding Your 401k Beta Essay

650 words - 3 pages Project 4: Finding Your 401(k) Beta The following report will evaluate and compare the systematic risk of the stocks within a 401(k) investment portfolio. The time period for which the stocks in this investment portfolio have been analyzed is January 1, 2004 through December 31, 2014. Each stock has had a beta test and corresponding regression analysis performed. A portfolio-wide beta test has also been completed to make further detailed

Trading Negative Beta Stocks

879 words - 4 pages substantial losses/gains suffered by an individual or an organization. According to Bruce Greenwald, investors who primarily trade in futures may hedge their futures against synthetic futures. A synthetic in this case is a synthetic future comprising a call and a put position. Long synthetic futures means long call and short put at the same expiry price. To hedge against a long futures trade a short position in synthetics can be established, and

Analysis of Beta

666 words - 3 pages Syed Quadri Dr. Deshkovski 4-27-2015 Investments Individual Project 1. Discussion of Beta What is beta and how can we use it to analyze a stock. Before I analyze my quantitative data from my excel I’m going to discuss Beta in general. For my discussion of beta I will be using 3 examples of stocks that each have a different beta. Apple (AAPL) with a beta of .93, fluctuates close to the overall market. Walmart (WMT) has a beta of .3

Summary Of Vhs Over Beta

582 words - 3 pages interest from consumers. Initially, VHS had a longer recording time but lower picture quality. However, these technical differences were short-lived, and over the next few years the two standards leap-frogged each other repeatedly. Perhaps more important, JVC followed more open policy for partners. Says Morita: “we didn’t put enough effort into making a family.… The other side, coming later, made a family.” By 1984, while the Beta group numbered only

The Study Beta Is Found by Statistical Analysis of Individual, Daily Share Price Returns, in Comparison with the Market's Daily Returns over Precisely the Same Period. in Their Classic 1972 Study...

553 words - 3 pages stock's beta is 1. A stock with a beta of 1.5 would rise by 15% if the market rose by 10%, and fall by 15% if the market fell by 10%. (For further reading, see Beta: Gauging Price Fluctuations and Beta: Know The Risk.) Beta is found by statistical analysis of individual, daily share price returns, in comparison with the market's daily returns over precisely the same period. In their classic 1972 study titled "The Capital Asset Pricing Model: Some Empir

Coporate Finance

4626 words - 19 pages policy measures to strengthen the investor confidence and rope in more investors into the capital markets. The rest of the paper is organized as follows. In section II, we explain the nature of relationship between beta and returns and the testing procedure advocated by Pettengill/Sundaram/Mathur (1995). It also reviews the relevant literature pertaining to the study. Section III presents an overview of the design and methodology of the

Midland Resources Cost of Capital

896 words - 4 pages 1. Calculation of WACC of a Multi-Division Corporation 2. Sources of Data and their limitation 3. Use of CAPM, Cost of Equity, Effect of Leverage on the Ce, WACC 4. Use of data for comparable to estimate asset betas for division-specific cost of capital 5. Biases and Limitations No financial modeling. In the previous years they would include WACC as part of case study 3 – Now it has been changed to 2 – without any actual financial

Boeing Case Study

2585 words - 11 pages Corporate Finance ------------------------------------------------- Boeing 777 Case Study Question 1 - What is the appropriate required rate of return against which to evaluate perspective IRR from Boeing 777? To evaluate the IRR of Boeing 777, need to compare it against the WACC of Boeing’s commercial business. The first step is to estimate a value for WACC: WACC=DV*rD*1-T+EV*rE 1. Cost of Debt As provided in the case, the tax

Marriott Wacc Case Study

2549 words - 11 pages divisions utilizing CAPM and WACC. This case illustrates how to calculate beta based on comparable companies and to lever betas to adjust for capital structure; the appropriate risk-less rate and market risk premium; the choice of time period to estimate expected returns and the difference between the geometric and the arithmetic average as a measure of expected returns. SYNOPSIS Marriott Corporation began in 1927, and over the next 60 years

Food Industry

3217 words - 13 pages CASE STUDY HOMEWORK CORPORATE FINANCE 1 The Situation: In 2010 a new company was created in order to enter into the food industry. They spent many months in studying the market, engineering the products and the commercial strategy, find out the production plants. At the end of 2010 the business plan is ready and the company has already participated to an exhibition where many potential customers said to be very interested to the project

Related Essays

Beta Management Company Essay

854 words - 4 pages October 1, 2012 Case Study#6: Beta Management Company In 1988, Sarah Wolfe formed and became the CEO of an investment management company named Beta Management Company in the Boston metro area. It was primarily created due to the results of the October 1987 market crash when a rich married couple was saddened by their investment losses. In early 1991, Ms. Wolfe was pondering whether or not to initiate a plan to set out new objectives and

Beta Blockers After Myocardial Infarction Essay

3431 words - 14 pages reduced mortality 30 days after PCI for MI were seen when beta blockers were used. Mortality values were reported as percentages, and not actual case numbers. Clinical scenario relevance. * This observation study design lends itself to confounding factors. For example, the patients who did not receive a beta blocker were generally less stable. It is possible that the initial stability of a patient influenced their mortality rates, not the use

Beta Estimation Essay

3705 words - 15 pages Calculating and Interpreting Beta Introduction: In 1990, William Sharpe won a Nobel Prize in Economics for his work in developing the Capital Asset Pricing Model (CAPM). Traditionally the CAPM has been the basis for calculating the required return to the shareholder. This figure in turn has been used to calculate the economic value of the stock and the Weighted Average Cost of Capital (WACC) for capital budgeting. In recent years, the

Beta Blockers Essay

1235 words - 5 pages Beta-blockers xxxx Collin College HPRS 1310-WW1 April 15, 2012 The first beta-blocker drug approved by the FDA in 1967 was developed by Sir James Black, an accomplishment for which he was awarded the Nobel Prize in Medicine in 1988 (Stapleton, 1997). Sir Black took a different approach to the treatment of angina pectoris—instead of using drugs to increase the amount of oxygen delivered to the heart, Black sought to find a drug that could