Assume: a company has a portfolio of five investment projects
	Project 1	Project 2	Project 3	Project 4	Project 5		Peer Group	Market
2007	-4.00%	-4.15%	-12%	-17.75%	-10.50%		-7.35%	-3%
2008	-7.23%	1.22%	11.35%	-18.25%	5.50%		-9.27%	-1.20%
2009	7.85%	5.50%	7.20%	-7.60%	-7.75%		8.25%	3.75%
2010	8.37%	8.05%	3.50%	12.55%	11.22%		11.37%	4.50%
2011	9.05%	10.15%	10.27%	10.30%	10.65%		10.95%	7.10%
2012	-11.30%	-3.30%	7.33%	9.64%	5.35%		10.50%	6.17%
2013	9.17%	8.90%	2.57%	11.55%	1.33%		7.75%	3.19%
2014	10.55%	9.33%	2.90%	10.90%	17.21%		8.30%	3.30%
2015	12.27%	10.60%	4.53%	8.30%	15.00%		8.92%	4.22%
2016	13.52%	9.50%	6.20%	9.25%	12.00%		6.70%	5.70%
2017	-8.30%	-3.30%	8.05%	8.78%	9.37%		-7.90%	2.55%
2018	12.65%	8.60%	7.30%	8.87%	3.37%		10.35%	2.47%
2019	15.24%	7.95%	6.50%	9.33%	3.30%		11.28%	2.15%
2020	-8.30%	5.10%	6.35%	7.27%	8.15%		6.05%	-3.35%
2021	12.00%	11.00%	27%	33%	9.85%		8.73%	7.05%
2022	16.5%	7.5%	7.2%	24.7%	11.7%		15.3%	-0.10%
2023	11.0%	8.1%	8.0%	15.3%	12.8%		11.9%	2.9%
2023 years data are forecasts
Portfolio weights Scenario	18%	15%	22%	27%	18%	100%
Step 1: Analyze each project returns, ranking projects in terms of:
	1. average historical returns for 2007-2021
	2. riskiness of returns over 2007-2021 period
	3. average expected returns for 2007-2023 excluding years of the crises (2007-2008 and 2020-2021)
	4. riskiness of returns over 2007-2023 period excluding years of the crises.
Step 2: Calculate betas for each project, portfolio of projects and the peer group for the following periods (use Market):
	1. 2007-2021
	2. Ex-crises period 2007-2023 (excluding 2007-2008 and 2020-2021)
	Use SLOPE command method for calculating betas.
	3. Rank each project in terms of its betas and discuss their rankings.
	How do betas change across 1. and 2. above and why?
Step 3: Plot in a scattergram chart risk-return relationships for all projects, portfolio of projects, peer group and the market:
	On X-axis, plot given period riskiness of returns
	On Y-axis, plot corresponding average returns for the same period.
	Using the same graph, plot these risk-return relationships by project for the following two sub-periods:
	Period 1: 2007-2021
	Period 2: 2007-2023 excluding years of the crises
	Analyze risk-return performance of each investment project across all periods and across periods excluding major crises.
Step 4: As an analyst reviewing 5 investment projects, what can you conclude about each project risk-adjusted performance?
	Which project(s) would you recommend the firm to undertake and why, assuming the firm can only pursue 2 projects of its choice?
	How did your firm portfolio of investments perform over 2007-2021? How sensitive it was to crises periods conditions?

Answer rating: 100% (QA)

Here is the analysis of the investment projects based on the information provided Step 1 1 Average h... View the full answer