The Allied Group has acquired Kramer Industries and is now considering additional investments. They have determined that there is a firm that is a good fit for their portfolio, the Kramer firm of Montana. The firm was established in 1990 and has the following historical returns:
|
Kramer Industries |
|
|
Year |
Earnings |
|
1990 |
(8% Loss) |
|
1995 |
23% |
|
2000 |
26% |
|
2005 |
31% |
|
2010 |
18% |
Address all of the following questions:
- What was the average return for the stock over the period of 1990 through 2010?
- What was the standard deviation for the stock over this period?
- Assume that you currently have a portfolio that returns 19.5%. If you add this stock to the current portfolio, what would happen to the average return on the portfolio?
- Should Allied invest in the stock? Justify your response.
3 to 4 page paper in a Microsoft Word document, using APA style
