1.
=Sum(probability*cash flow)
=0.5*10000+0.5*20000
=150000
2.
=Expected cash flow/(1+risk free rate+risk premium)
=15000/(1+2%+6%)
=13888.89
A and B thank you !! 10. Consider a risky portfolio. The end-of-year cash flow derived...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000 or $150,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 5%. a. If you require a risk premium of 10%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $40,000 or $125,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 6%. a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return...
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Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $40,000 or $135,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 4%. a. If you require a risk premium of 10%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) Value of the portfolio $ b. Suppose the portfolio can be purchased for the amount you found in (a). What will...
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6.6.0 Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $60,000 or $175,000, with equal probabilities of 0.5. If you require a return of 12%, how much are you willing to pay for this portfolio?
Question 16 9 pts The end-of-year of a risky portfolio will be either $20,000 with 25% probability or $8,000 with 75% probability. Investing in T-bill pays a return of 2% A. If you require a risk premium of 9%, what is the expected rate of return? [Select) B. How much are you willing to pay for the portfolio? [Select)
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