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c.
Recognizing that all gains on the Stalchecks’s investments
were unrealized, calculate the before-tax portfolio HPR for their
four-investment portfolio during the past calendar year. Evaluate
this return relative to its current income and capital gain
components.
d.
Use the HPR calculated in question c to compute Jensen’s
measure (Jensen’s alpha). Use that measure to analyze the
performance of the Stalchecks’s portfolio on a risk-adjusted,
market-adjusted basis. Comment on your finding. Is it reasonable
to use Jensen’s measure to evaluate a four-investment portfolio?
Why or why not?
On the basis of your analysis in questions a, c, and d, what, if any,
recommendations might you offer the Stalchecks relative to the revision
of their portfolio? Explain your recommendations.
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FIN 402 Week 2 DQ 1
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What are different ratio categories? Which category is most important
to bondholders? Why? Which category is most important to
stockholders? Why?
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