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29. Suppose you hold a well-diversified portfolio with a very large number of securities, and that...
Suppose you held a well-diversified portfolio with a very large number of securities, and that the...
Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. If the ? of your portfolio was 0.18 and ?M was 0.22, the ? of the portfolio would be approximately 1.19 0.82 1.56 0.64
Suppose you held a well-diversified portfolio with a very large number of securities, and that the...
Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. If the σ of your portfolio was 0.20 and σM was 0.16, the β of the portfolio would be approximately A. 0.64. B. 0.80. C. 1.25. D. 1.56.
To solve this problem, note that a well-diversified portfolio should lie on the Capital Market Line....
To solve this problem, note that a well-diversified portfolio should lie on the Capital Market Line. The market portfolio has an expected return of 11.5 percent and a standard deviation of 19 percent. The risk-free rate is 4.1 percent. a. What is the expected return on a well-diversified portfolio with a standard deviation of 9 percent? b. What is the standard deviation of a well-diversified portfolio with an expected return of 20 percent?
An investor holds two well-diversified portfolios on US securities. The expected return on portfolio A is...
An investor holds two well-diversified portfolios on US securities. The expected return on portfolio A is 13% and the expected return on portfolio B is 8%, and βA = 1 and βB = 0.7. What should be the risk-free rate according to the CAPM?
You already have a very well-diversified portfolio of common stock with a beta of 2, and...
You already have a very well-diversified portfolio of common stock with a beta of 2, and you want to add stock AAA or BBB into the portfolio. AAA’s standard deviation is 0.2300 and its beta is 4. BBB’s standard deviation is 0.6500 and its beta is 0.5. How will the addition affect the portfolio’s risk? If we add more factors into the one-factor asset pricing model, what happens to the required returns, increase or decrease? If the expected future cash...
You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth...
You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $230,000. Consider the eturn old portfolio House 5t 151 18% 30% The correlation coefficient between your portfolio and the house is 0.3. a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Expected return Standard deviation b. Suppose you decide to...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $160,000. Consider the summary measures in the following table: Investment Expected Return Standard Deviation Old portfolio House 6% 13% 11% 19% The correlation coefficient between your portfolio and the house is o.5 a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and round intermediate calculations. Round your final answers to 2 decimal places.) the house? (Do...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $160,000. Consider the summary measures in the following table: Investment Expected Return Standard Deviation Old portfolio House 6% 138 118 198 The correlation coefficient between your portfolio and the house is 0.5. a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers to 2 decimal...
You are given the option of choosing between three well diversified portfolios to use as the...
You are given the option of choosing between three well diversified portfolios to use as the optimal portfolio in a single index model. Information on them is given below: Portfolio Expected Return Expected Standard Deviation A .1 .05 B .12 .07 C .14 .08 (20 points) If the risk-free rate is .04, which portfolio would you choose? Why? (20 points) How, if at all, does your answer change if the risk-free rate is .06? Explain.
You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth...
You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth summary measures in the following table: InvestrenEspected Return Standard Deviat.ion Old portfolio House 18% 30 153 The correlation coefficient between your portfolio and the house is 0.3. a. What is the expected return and the standard deviation for your portfolio comprising your old portfoli round intermediate calculations. Round your final answers to 2 decimal placesortlio and the house? (Do not Expected return Standard deviation...
Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. If the ? of your portfolio was 0.18 and ?M was 0.22, the ? of the portfolio would be approximately 1.19 0.82 1.56 0.64
To solve this problem, note that a well-diversified portfolio should lie on the Capital Market Line. The market portfolio has an expected return of 11.5 percent and a standard deviation of 19 percent. The risk-free rate is 4.1 percent. a. What is the expected return on a well-diversified portfolio with a standard deviation of 9 percent? b. What is the standard deviation of a well-diversified portfolio with an expected return of 20 percent?
You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $230,000. Consider the eturn old portfolio House 5t 151 18% 30% The correlation coefficient between your portfolio and the house is 0.3. a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Expected return Standard deviation b. Suppose you decide to...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $160,000. Consider the summary measures in the following table: Investment Expected Return Standard Deviation Old portfolio House 6% 13% 11% 19% The correlation coefficient between your portfolio and the house is o.5 a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and round intermediate calculations. Round your final answers to 2 decimal places.) the house? (Do...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $160,000. Consider the summary measures in the following table: Investment Expected Return Standard Deviation Old portfolio House 6% 138 118 198 The correlation coefficient between your portfolio and the house is 0.5. a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers to 2 decimal...
You have $390,000 invested in a well-diversified portfolio. You inherit a house that is presently worth summary measures in the following table: InvestrenEspected Return Standard Deviat.ion Old portfolio House 18% 30 153 The correlation coefficient between your portfolio and the house is 0.3. a. What is the expected return and the standard deviation for your portfolio comprising your old portfoli round intermediate calculations. Round your final answers to 2 decimal placesortlio and the house? (Do not Expected return Standard deviation...
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