a) Portfolio SD = SD x Weight
=> 9% = 20% x Weight
=> Weight = 45% should be the percentage of risky portfolio
b) Slope = Difference in returns / Difference in SD = (16% - 5%) / (20% - 0%) = 0.55
c) Assume you invest y in risky and 1-y in risk-free,
=> 22% = 16% x y + 8% x (1 - y)
=> y = (22 - 8) / (16 - 8) = 1.75 = 175%
1 - y = -75% is the weight of risk-free rate.
Hence, you need to borrow = 500,000 x 75% = $375,000
Problem 2 (15 points) You invest $1,000 in a complete portfolio. The complete portfolio is composed...
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10% and a treasury bill with a rate of return of 5%. __________ of your complete portfolio should be invested in the risk-free asset if you want your complete portfolio to have a standard deviation of 9%.
You invest $1,200 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 20% and a Treasury bill with a rate of return of 4%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 7%.
You invest $1,900 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 18% and a Treasury bill with a rate of return of 3%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 9%.
Good Luck! Question 32 1 pts You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 6% of your complete portfolio should be invested in the risky portfolio if your risk aversion is 4. 62.5% 37.5% 100% 50% • Previous Next
You invest $3,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 15% and a standard deviation of 20% and a Treasury bill with a rate of return of 10%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 8%. rev: 02_12_2013_QC_26430 17% 5% 37% 40%
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 15% and a treasury bill with a rate of return of 5%. % of your money should be invested in the risk-free asset to form a complete portfolio with an expected rate of return of 9%. Hint: Eſrc)=y.E(rp)+(1-y).rf Your answer must be in two digits with no decimal. Round off your...
You invest $100 in a portfolio. The portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 15% and a Treasury bill with a rate of return of 5%. What proportion of your total portfolio should be invested in the risky asset to form a portfolio with an expected rate of return of 9%?
You invest $100 in a portfolio. The portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 15% and a Treasury bill with a rate of return of 5%. What proportion of your total portfolio should be invested in the risky asset to form a portfolio with an expected rate of return of 9%?
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10% and a treasury bill with a rate of return of 5%. A portfolio that has an expected outcome of $115 could be formed if you __________.
You manage a risky portfolio with an expected return of 12% and a standard deviation of 24%. Assume that you can invest and borrow at a risk-free rate of 3%, using T-bills. a. Draw the Capital Allocation Line (CAL) for this combination of risky portfolio and risk-free asset. What is the Sharpe ratio of the risky portfolio? b. Your client chooses to invest 50% of their funds into your risky portfolio and 50% risk-free. What is the expected return and...