Year <?xml:namespace prefix = o ns = \"urn:schemas-microsoft-com:office:office\"
ID: 2691971 • Letter: Y
Question
Year <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
GoopGip Stock
LoopLip Stock
S&P 500
2007
-12.8%
4.85%
-1.87%
2008
-4.5%
-8.25%
2.39%
2009
5.9%
3.33%
0.45%
2010
1.9%
7.21%
3.56%
2011
-4.8%
-1.55%
-1.38%
The Z-statistic at the 90% confidence level is 1.2816
The Z-statistic at the 95% confidence level is 1.6449
The Z-statistic at the 99% confidence level is 2.3263
1. What is the maximum dollar loss if you invest $5,000,000 in GoopGip stock using beta?
Year <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
GoopGip Stock
LoopLip Stock
S&P 500
2007
-12.8%
4.85%
-1.87%
2008
-4.5%
-8.25%
2.39%
2009
5.9%
3.33%
0.45%
2010
1.9%
7.21%
3.56%
2011
-4.8%
-1.55%
-1.38%
Explanation / Answer
Minimum return using 99% confidence = -2.86% - 0.4093040000%*2.3263 = -3.8121639% Dollar loss = $5000000 * 0.038121639 = $190608.195
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