Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -
Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.
QUESTION 17 You have are looking at an investment portfolio that will yield the following Stock...
Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta A $250,000 1.30 B 150,000 1.60 с 500,000 0.75 D 100,000 -0.35 Total investment $1,000,000 The market's required return is 11% and the risk-free rate is 4%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places. % Check My Work
QUESTION 18 Which of the following statements is CORRECT? 1. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks. 2. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount. 3. It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock. 4. An...
Suppose you have a portfolio consisting of the following: Stock Amount Invested Beta Syrah Co. $350,000 0.55 Cab Co $220,000 1.27 Zin Co. $810,000 2 Assume the expected return on the market is 10% a. What is the portfolio beta? (round to 2 decimals) b. If the risk-free rate is 3.5% and the market risk premium is 6.5%, what is the expected return on the portfolio? % c. Suppose after management fees and other expenses the actual return on the...
questions 9 & 10 9. You have just bought IBM stock. Your total investment was $100. You will hold it for one year and then sell. You expect to make 10% on your investment that is you expect to have $110 after one year. You leur private information that one of IBS projects, which was expected to pay off three years from now, is now not going to pay off after all. This news will definitely be public by tomorrow....
The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio P which invests in both the risk-free investment and the market portfolio.a. How much should you invest in the market portfolio and the risk-free investment if you want portfolio P to have an expected return of 40%?b. How much should you invest in the market portfolio and the risk-free investment...
Problem 8-7 Portfolio required return Suppose you are the money manager of a $5.02 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta $ 420,000 1.50 780,000 - 0.50 1,020,000 1.25 2,800,000 0.75 If the market's required rate of return is 11% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. Check My Work...
Portfolio required return Suppose you are the money manager of a $4.44 million investment fund. The fund consists of four stocks with the following investments and betas: Beta 1.50 0.50 1.25 0.75 Stock Investment $220,000 700,000 1,220,000 2,300,000 If the market's required rate of return is 13% and the risk-free rate is 3%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places
According to contemporary investment theory it is safer to diversify your portfolio by selecting a variety of investments rather than choosing a single investment option. Using the problem solved in class add constraints so that each fund type is used for a minimum of 5% of the total portfolio. (the optimal solution should indicate to total annual return of 17.56%) Complete the same SolverTable by changing beta with the new model that incorporates the new constraints. Describe the differences between...
For this question, i have trouble doing the first one. Can you please explain how can i get the RATE OF RETURN FOR RF? Thanks X Yand Zare portfolios of securities. Data pertaining to these portfolios and the market portfolio are given in the following table: Std dev(R 0.28 Cov(Ri Rm Portfolio E(RD Beta P p.m X 0.015 Y 0.23 ? 0.17 1.5 0.92 0.048 0.34 ? M ? 0.10 2 0.02 Also Cov(Rs.Ry= 0.04 REQUIRED risk free Calculate the...
PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $5.06 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta $ 260,000 1.50 500,000 (0.50) 1,500,000 1.25 2,800,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 4%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. hoat Work