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EXAM 1 MGMT 590 | Complete solution
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1-      For Apple, ticker AAPL, download the monthly prices from 2009 to 2014 from Yahoo Finance.

a.       Using the Adjusted close price, calculate the annualized average return, standard deviation, and the ratio of the average over the standard deviation.

b.      Compare the standard deviation you got with the implied volatility found in the option tab for Apple in Yahoo Finance. Compare for the option with a $127 strike price. Is the standard deviation you calculated higher or lower than the implied volatility?

c.        For the SP500 find the annualized average, annualized standard deviation, and the ratio of the average over the standard deviation for the years 2009 to 2014. Use the SP500 factsheet from Standard and Poors.

d.      Compare the averages, standard deviations, and ratio of average divided by standard deviation for Apple and the SP 500. Has Apple beaten the market between the years 2009 and 2014? Repeat note, for the SP500 use the factsheet from Standard and Poors, it has all the yearly averages.


2-      For Apple, calculate the price by using the Dividend Discount Model, Free Cash Flow model, and the ratios. Is Apple overvalued or undervalued? Compare your results with the price in the market.

Use a risk free rate of 0.26% per year, the beta you can get from Yahoo Finance/ key statistics. The Financial Statements for Apple, year 2014, are found in:



3-      Answer the following comparing the funds Franklin1 and Franklin2. Use three years to compare.

a.       Which of the funds gives higher returns to the person investing in shares class A?, please mention which of the returns you used to answer .

b.      Which of these funds is riskier?, again, please mention what measure are you using to compare.

c.       Which of the funds offers the highest return per unit of risk for the person investing in shares class A?

d.      Have any of these funds beaten the SP500 in the last 3 years? If any, which?

e.      Which of these funds is riskier than the SP500, if any? Note: compare total risk.


4-      Describe briefly which sectors are represented in the following indexes, ticker in parentheses.

a.       Dow Jones (DJI)

b.      SP500 (GSPC)

c.       NASDAQ (IXIC)


5-      The figure compares the Dow, SP500, and NASDAQ for the last five years. Based on the figure, answer the following:

a.       Were tech stocks (Apple, Microsoft, Intel, etc) or manufacturing stocks better investments in the last five years?

b.      Was it better to invest in a mix of big companies from all sectors or focus on manufacturing in the last five years?

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EXAM 1 MGMT 590 | Complete solution
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  • Submitted On 27 Jun, 2015 11:20:21
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Risk Free Rate = 0.26% Beta Value = 1.07 Return from the ma...
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