Project 1

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.

Submission Details:

  • Submit your 3 to 4 page paper in a Microsoft Word document, using APA style.