The CAPM Olter, Inc. is starting its risk management program for the company and has asked for your help in determining critical risk measurements for

The CAPM Olter, Inc. is starting its risk management program for the company and has asked for your help in determining critical risk measurements for the firm. The
company has identified several factors in the market that they believe are
critical for your tasks:
The risk-free rate is 6%
The required return on the average stock is 13%
Olter’s average return is 13%
Required:
What is Olter’s beta coefficient?
How does the beta coefficient influence the firm’s stock value?
What is the required rate of return for Olter?
In terms of risk, how does Olter compare to the average firm in the market?
If Olter’s beta increased to 1.6, what would you expect to happen to the
required rate of return and what does this mean for the firm?
Deliverable:
By Saturday, April 6, 2013, submit the
completed assignment to the W5: Assignment 2 Dropbox. Use a
Microsoft Excel spreadsheet that illustrates your calculations. You may use the
formulas embedded in Microsoft Excel and/or a financial calculator for these
calculations.
Part Two: Final Project 4: Portfolio Return and Risk;
Report and Presentation
Part A: Portfolio Return and Risk
Required:
Select four stocks from finance.yahoo.com, google.finance.com, or
moneycentral.msn.com. One should be a clothing manufacturer, one should be a
retailer, one should be an automobile manufacturer, and one should be a
restaurant or food producer.
Obtain the closing price, the change in price from the previous day, and the
beta.
Calculate the return on holding the stock for a day (this should be the
change in price over the closing price without the change).
Calculate a portfolio return with weights of 0.25 for each stock.
Calculate a weighted beta with weights of 0.25 for each stock.
Summarize the implications of the portfolio return and risk with respect to
what you learned about beta and the CAPM.
Deliverable:
By Saturday, April 6, 2013, submit the
completed assignment to the W5: Assignment 2 Dropbox. Use
a Microsoft Excel spreadsheet that illustrates your calculations. You may use
the formulas embedded in Microsoft Excel and/or a financial calculator for these
calculations.