Homework Answers
x1 + x2 = 1. So, x2 = 1 - x1
The beta of the portfolio is the systematic risk, which is zero.
Beta of the portfolio = x1 * beta of asset a + x2 * beta of asset b
0 = x1 * 1.5 + x2 * 0.5
0 = (1 - x2) * 1.5 + 0.5 x2
0 = 1.5 - 1.5x2 + 0.5x2
0 = 1.5 - x2
x2 = 1.5
The value of x2 = 1.5
Can you please upvote? Thank You :-)
Add Answer to:
8. Consider a portfolio containing assets A and B (with bia - 1.5 and 61,8=0.5). Xi...
4. Consider a portfolio P containing assets 1 and 2 (with b,1 in which x1 is...
4. Consider a portfolio P containing assets 1 and 2 (with b,1 in which x1 is the fraction of wealth in- vested in 1. For what value of r does the portfolio P have no systematic risk? 0.8 and b1,2 1.2) (а). — 2.0 (b). О.5 (с). 1.0 (d). 3.0
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[r]=0.1,...
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[r]=0.1, o =0.09. E[ra] -0.08, o; -0.04. Which one has lower absolute risk and which one has lower relative risk? (1): (2) b) Find the mean return, E[r], and variance, o. of a portfolio consisting of 70% of your total wealth invested in asset A (Wx=0.70), and 30% of your total wealth invested in asset B (w3= 0.30). The correlation between assets A and B...
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[7]0.1,...
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[7]0.1, -0.09, E[TB] =0.08, o -0.04. Which one has lower absolute risk and which one has lower relative risk? (1): b) Find the mean return, E[r.), and variance, oz. of a portfolio consisting of 70% of your total wealth invested in asset A (w4=0.70), and 30% of your total wealth invested in asset B (Wg= 0.30). The correlation between assets A and B (P3) =...
There are three assets, A, B and C, where A is the market portfolio and C...
There are three assets, A, B and C, where A is the market portfolio and C is the risk-free asset. The return on the market has a mean of 12% and a standard deviation of 20%. The risk-free asset yields a return of 4%. Asset B is a risky asset whose return has a standard deviation of 40% and a market beta of 1. Assume that the CAPM holds. Compute the expected return of asset B and its covariances with...
Note: Part a, b and c are not related to each other. a. Portfolio Man wants...
Note: Part a, b and c are not related to each other. a. Portfolio Man wants to create a portfolio as risky as the market and he has $1,000,000 to invest. Given this information, fill in the three missing values of the following table: Asset Investment Beta $170,000 1.6 $140,000 1.5 $130,000 $200,000 Risk-free asset b. An asset's reward-to-risk ratio is defined as its risk premium divided by its standard deviation It is a useful statistic to summarize the asset's...
a. Portfolio Man wants to create a portfolio as risky as the market and he has...
a. Portfolio Man wants to create a portfolio as risky as the market and he has $1,000,000 to invest. Given this information, fill in the three missing values of the following table: Asset Investment Beta $170,000 1.6 $140,000 1.5 $130,000 D $200,000 Risk-free asset b. An asset's reward-to-risk ratio is defined as its risk premium divided by its standard deviation. It is a useful statistic to summarize the asset's risk-return trade-off. Consider the following information: Stock A has a reward-to-risk...
please help and show your work! Consider a market model with three assets: two risky assets...
please help and show your work!
Consider a market model with three assets: two risky assets (#1 and #2) and one risk-free asset (#3). The risk-free rate of interest is r = 3%. The parameters of the risky returns are as follows: 02 = 15%, Mi = 6%, H2 = 9%, 01 = 10%, P12 = -10%. 1. Let u(x) and g(x) with xe (-0,00) denote, respectively, the expected return and volatility of my portfolio if I allocate 100x% of...
nts) Consider the fllowing two Security X and Y 1.2 Return 9.40% 1360% Risk-free assets 25%...
nts) Consider the fllowing two Security X and Y 1.2 Return 9.40% 1360% Risk-free assets 25% (1) Which security (X or Y) in the table hs risk? e has the least total risk? e least total risk? Which has the least che ecst third invested in Y? is the systematic risk for a portfolio with twor two-thirds of the funds invested in X and one- X, 45 (3) What is the portfolio beta and the portfolio expected return if you...
39 An investment advisor has recommended a $50,000 portfolio containing assets R, J, and K; $25,000...
39 An investment advisor has recommended a $50,000 portfolio containing assets R, J, and K; $25,000 will be invested in asset R, with an expected annual return of 12 percent; $10,000 will be invested in asset J, with an expected annual return of 18 percent; and $15,000 will be invested in asset K, with an expected annual return of 8 percent. The expected annual return of this portfolio is О 10.00% 12.67% 12.00% 11.78%
What is the standard deviation of Asset M and of the portfolio equally invested in assets M, N, a...
What is the standard deviation of Asset M and of the portfolio
equally invested in assets M, N, and O?
Could Sally reduce her total risk even more by using assets M
and N only, assets M and O only, or assets N and O only? Use a
50/50 split between the asset pairs, and find the standard
deviation of each asset pair.
Please show all of the steps
Benefits of diversification. Sally Rogers has decided to invest her wealth...
4. Consider a portfolio P containing assets 1 and 2 (with b,1 in which x1 is the fraction of wealth in- vested in 1. For what value of r does the portfolio P have no systematic risk? 0.8 and b1,2 1.2) (а). — 2.0 (b). О.5 (с). 1.0 (d). 3.0
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[r]=0.1, o =0.09. E[ra] -0.08, o; -0.04. Which one has lower absolute risk and which one has lower relative risk? (1): (2) b) Find the mean return, E[r], and variance, o. of a portfolio consisting of 70% of your total wealth invested in asset A (Wx=0.70), and 30% of your total wealth invested in asset B (w3= 0.30). The correlation between assets A and B...
Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[7]0.1, -0.09, E[TB] =0.08, o -0.04. Which one has lower absolute risk and which one has lower relative risk? (1): b) Find the mean return, E[r.), and variance, oz. of a portfolio consisting of 70% of your total wealth invested in asset A (w4=0.70), and 30% of your total wealth invested in asset B (Wg= 0.30). The correlation between assets A and B (P3) =...
Note: Part a, b and c are not related to each other. a. Portfolio Man wants to create a portfolio as risky as the market and he has $1,000,000 to invest. Given this information, fill in the three missing values of the following table: Asset Investment Beta $170,000 1.6 $140,000 1.5 $130,000 $200,000 Risk-free asset b. An asset's reward-to-risk ratio is defined as its risk premium divided by its standard deviation It is a useful statistic to summarize the asset's...
a. Portfolio Man wants to create a portfolio as risky as the market and he has $1,000,000 to invest. Given this information, fill in the three missing values of the following table: Asset Investment Beta $170,000 1.6 $140,000 1.5 $130,000 D $200,000 Risk-free asset b. An asset's reward-to-risk ratio is defined as its risk premium divided by its standard deviation. It is a useful statistic to summarize the asset's risk-return trade-off. Consider the following information: Stock A has a reward-to-risk...
please help and show your work!
Consider a market model with three assets: two risky assets (#1 and #2) and one risk-free asset (#3). The risk-free rate of interest is r = 3%. The parameters of the risky returns are as follows: 02 = 15%, Mi = 6%, H2 = 9%, 01 = 10%, P12 = -10%. 1. Let u(x) and g(x) with xe (-0,00) denote, respectively, the expected return and volatility of my portfolio if I allocate 100x% of...
nts) Consider the fllowing two Security X and Y 1.2 Return 9.40% 1360% Risk-free assets 25% (1) Which security (X or Y) in the table hs risk? e has the least total risk? e least total risk? Which has the least che ecst third invested in Y? is the systematic risk for a portfolio with twor two-thirds of the funds invested in X and one- X, 45 (3) What is the portfolio beta and the portfolio expected return if you...
39 An investment advisor has recommended a $50,000 portfolio containing assets R, J, and K; $25,000 will be invested in asset R, with an expected annual return of 12 percent; $10,000 will be invested in asset J, with an expected annual return of 18 percent; and $15,000 will be invested in asset K, with an expected annual return of 8 percent. The expected annual return of this portfolio is О 10.00% 12.67% 12.00% 11.78%
What is the standard deviation of Asset M and of the portfolio
equally invested in assets M, N, and O?
Could Sally reduce her total risk even more by using assets M
and N only, assets M and O only, or assets N and O only? Use a
50/50 split between the asset pairs, and find the standard
deviation of each asset pair.
Please show all of the steps
Benefits of diversification. Sally Rogers has decided to invest her wealth...
Most questions answered within 3 hours.
-
This statement is TRUE regarding abstract expressionism:
It greatly influened Impressionist artists
It was considered Germany’s...
asked 18 seconds ago -
Implement the function flip_dict which takes in a dictionary and
returns a similar dictionary where the...
asked 4 minutes ago -
In a 1999-2000 NHANES report, researchers estimated that 64
percent of U.S. adults ages 20-74 were...
asked 26 minutes ago -
A resistance R and a 0.5H inductance are in series
across a 57Hz ac voltage. The...
asked 32 minutes ago -
Chapter 3:
Critical Thinking Question 10: Give examples of active and
passive voice. Explain when each...
asked 37 minutes ago -
reason why u pick that choice
1. an adolescent who is currently exploring different options
for...
asked 38 minutes ago -
Burns Company's 2019 and 2018 balance sheet presented the
following data for equipment. Equipment 12/31/2019 $325,000...
asked 42 minutes ago -
List one example of each: one micro and one macro perspective of an
institution from a...
asked 57 minutes ago -
Which type of memory management divides memory into unequally
sized blocks (multiple choices may or may...
asked 58 minutes ago -
1) In the mechanism for peptide bond formation, what acts as the
initial electrophile?
2) Consider...
asked 1 hour ago -
Can you explain step by step.
Assume that we want to construct a confidence interval. Do...
asked 1 hour ago -
A sledge loaded with bricks has a total mass of 18.9 kg and is
pulled at...
asked 1 hour ago