What is portfolio theory and why is it important to


1. You have recently been hired as the regional sales manager for a national reference laboratory. You have three sales managers reporting up to you, and each sales manager has five-six sales representatives reporting up to him/her. After examining the sales data, the team led by Thomas is noticeably more successful than are the other two.


2. You are the national sales manager for an industrial chemical company. Your industry is being inundated by new entrants in the market, and your company has lost market share for the past five quarters.  Use the foundation of your selected approach to explain what you could do to turn around your sales results. Please include your rationale for selecting the approach that you did.


3. Risk & Return and the CAPM.

Based on the following information, calculate the required return based on the CAPM:

Risk Free Rate = 3%

Market Return =10.5%

Beta = 1.2

4. Risk and Return, Coefficient of Variation

Based on the following information, calculate the coefficient of variation and select the best investment based on the risk/reward relationship.

Std Dev. Exp. Return

Company A 10.4 15.2

Company B 14.6 22.9

5. Risk & Return and the CAPM.

Based on the following information, calculate the required return based on the CAPM:

Risk Free Rate = 3.5%

Market Return =10%

Beta = 1.08

6. Portfolio Theory Risk.

What is portfolio theory and why is it important to investing behavior?

Your response should be at least 250 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

7. Using a 5% discount rate, calculate the Net Present Value, Payback, Profitability Index, and IRR for each of the investment projects below (note, the inflows are for each year). Based on your calculations rank the projects and support you answer.

Project 1

Initial Invest= $500,000, Cash inflows of $100,000 for years 1-5 and $50,000 for years 6-10.

Project 2

Initial Invest= $1,000,000, Cash inflows of $400,000 for years 1-3, $0 for years 4-7 and $250,000 for years 8-10.

Project 3

Initial Invest= $800,000, Cash inflows of $300,000 for years 1-5, $0 for years 6-9 and $100,000 for year 10.

Assuming a budget of $1,200,000 what are your recommendations for the three projects in the above problem. Explain.

Assuming a budget of $2,000,000 what are your recommendations for the above problem? Explain.

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