Provide some recommendations on how to be successful? There are no specific format requirements. PROJECT SIMULATION 2

Provide some recommendations on how to be successful? There are no specific format requirements.

Transcribed Image Text:

PROJECT SIMULATION 2 Managerial Finance & Data Analysis Your task: Select 5-8 assets (e.g., stocks, ETFs, mutual funds, etc.) and answer the following questions: (1) Identify and quantify the idiosyncratic and systematic sources of risk which impact their performance. Comment on how the relationship between these sources of risk and performance vary across the bustness cycle (e.g., economic periods of expansion versus recessionary perioda). (2) Examine the correlation in performance between your selected assets. Comment on how this correlation varies across time (e.g., economic periods of expansion versus recessionary periods). (3) Calculate risk-adjusted performance measures (e.g., Sharpe and Treynor ratios) and rank the performance of the assets. Answer the following questions: (a) What do the betas tell us? (b) Does this ranking change across the business cycle? (4) According to classical finance theory, we are risk averse investors and demand higher rewards in order to take on more risk. Estimate the risk-return relation and discuss what you see with reference to our discussions about debt versus equity as well as investor psychology. (5) Interest rates are a fundamental measure of the cost of capital, and impact firms' cash flows and cost of debt. Examine how changes in interest rates impact the performance of your amets. Do you see any variation across time and across industries? PROJECT SIMULATION 2 Managerial Finance & Data Analysis Your task: Select 5-8 assets (e.g., stocks, ETFs, mutual funds, etc.) and answer the following questions: (1) Identify and quantify the idiosyncratic and systematic sources of risk which impact their performance. Comment on how the relationship between these sources of risk and performance vary across the bustness cycle (e.g., economic periods of expansion versus recessionary perioda). (2) Examine the correlation in performance between your selected assets. Comment on how this correlation varies across time (e.g., economic periods of expansion versus recessionary periods). (3) Calculate risk-adjusted performance measures (e.g., Sharpe and Treynor ratios) and rank the performance of the assets. Answer the following questions: (a) What do the betas tell us? (b) Does this ranking change across the business cycle? (4) According to classical finance theory, we are risk averse investors and demand higher rewards in order to take on more risk. Estimate the risk-return relation and discuss what you see with reference to our discussions about debt versus equity as well as investor psychology. (5) Interest rates are a fundamental measure of the cost of capital, and impact firms' cash flows and cost of debt. Examine how changes in interest rates impact the performance of your amets. Do you see any variation across time and across industries?

Answer rating: 100% (QA)

Due to the complexity and length of your request its best to break it down into smaller more manageable parts Lets start by selecting 58 assets and ad... View the full answer