Which of the following is a second way of formulating the Markowitz model?
a. Maximizing the expected return of the portfolio subject to a constraint on variance
b. Minimizing the expected return of the portfolio subject to a constraint on variance.
c. Maximizing the variance of the portfolio subject to a constraint on the expected return of the portfolio
d. Maximizing the variance of the portfolio with no constraint needed for the expected return of the portfolio
a
RATIONALE: Two basic ways to formulate the Markowitz model are (1) to minimize the variance of the portfolio subject to a constraint on the expected return of the portfolio and (2) to maximize the expected return of the portfolio subject to a constraint on variance.
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The Protek Company is a large manufacturer and distributor of electronic components. Because of some successful new products marketed to manufacturers of personal computers, the firm has recently undergone a period of explosive growth, more than doubling its revenues over the last two years. However, the growth has been accompanied by a marked decline in profitability and a precipitous drop in the company's stock price. You are a financial consultant who has been retained to analyze the company's performance and find out what's going wrong. Your investigative plan involves conducting a series of in-depth interviews with management and doing some independent research on the industry. However, before starting, you want to focus your thinking to make sure you can ask the right questions.
You'll begin by analyzing the firm's financial statements over the last three years.
PROTEK COMPANY
INCOME STATEMENTS
For The Periods ended 12/31
(000,000)
You are responsible for the following:
1) Complete the ratios indicated for three years
2) Compare the ratios to the industry in a write up. Indicate if the specific ratio is better or worse than the industry and why
Ratios to calculate:
1) Current Ratio
2) Average Collection Period
3) Debt Ratio
4) Times Interest Earned Ratio
5) Return on Equity
The Industry averages are as follows:
Industry
Average 20X1 20X2 20X3
Current Ratio 4.5
ACP 42 days
Debt Ratio 53%
TIE 4.5
ROE 22.8%
Which of the following nations is not a member of the Andean Common Market?
A) Venezuela B) Colombia C) Peru D) Argentina