Homework Answers
Let investment in XX=$x
Hence investment in YY=(90,000-x)
Portfolio beta=Respective beta*Respective investment weight
1=(x/90,000*2)+(90,000-x)/90,000*0.75
(1*90,000)=2x+67500-0.75x
90,000=2x+67500-0.75x
x=(90,000-67500)/(2-0.75)
=$18000=investment in XX
Hence investment in YY=(90,000-18000)=$72000.
Add Answer to:
Problem 12. 4 pts Taylor Hill wants to invest $90,000 in a two-asset portfolio with a...
Problem 11. [4 pts] Emily DiDonato is thinking of buying Berkshire Hathaway Inc. (BRK-B) priced at...
Problem 11. [4 pts] Emily DiDonato is thinking of buying Berkshire Hathaway Inc. (BRK-B) priced at $200 per share. She assumes that that risk-free rate is about 5% and the market risk premium (MRP) is 10%. If she thinks, the stock will rise to $320 per share by the end of the year, what beta would it need to have for this expectation to be consistent with the CAPM? (Show your calculations) Problem 12. 4 pts] Taylor Hill wants to...
Your client wants to invest in a portfolio of two stocks, A and B. Stock A...
Your client wants to invest in a portfolio of two stocks, A and B. Stock A has a beta of 1.15 while Stock B has a beta of 0.75. If you construct a portfolio that has the same systematic risk as the market, what percentage of the portfolio must be invested in Stock A?
You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free...
You have $10,000 to invest in a portfolio containing Stock R, Stock S, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 15% and that has only 120% of the risk of the overall market. If Stock R has an expected return of 25% and a beta of 1.6, Stock S has an expected return of 17.5% and a beta of 1.3, and the risk-free...
11. Since a small company is hard to finance and earn money, a government used to...
11. Since a small company is hard to finance and earn money, a government used to implement various policy of Inclusive finance to support their operations. In order to support this policy, each bank provide special borrowing rate for small companies to finance. The borrowing rate is 3% annually compounding, 2.6% semiannually compounding, 2.8% quarterly compounding, 1.5% semiannual rate, 0.75% quarterly rate for Bank A, Bank B, Bank C, Bank D, and Bank E respectively. Which bank will support mostly...
12 You want to create a portfolio equally as risky as the market, and you have $1,000,000 to invest. You must invest al...
12 You want to create a portfolio equally as risky as the market, and you have $1,000,000 to invest. You must invest all of your money. Your portfolio already contains assets A and B, and you need to decide how much of asset C and of the risk-free asset to buy. More detailed information is given below: 5.25 points Asset Investment Stock A $ 280,000 Stock B $ 400,000 Stock C Risk-free asset Beta 0.95 1.20 1.45 eBook Print References...
Problem 9 Intro You have $100,000 to invest and want to choose between two stocks and...
Problem 9 Intro You have $100,000 to invest and want to choose between two stocks and the risk-free asset. Security Stock 1 Stock 2 Risk-free asset E() 0.0881 0.0807 0.04 Beta Investment 1.3 $20,000 1.1 ? You want your portfolio to be as risky as the market overall. Part 1 Attempt 1/5 for 10 pts. What is the expected return of your portfolio? 3+ decimals Submit
The universe of available securities includes two risky stocks A and B, and a risk-free asset....
The universe of available securities includes two risky stocks A and B, and a risk-free asset. The data for the universe are as follows: Assets Expected Return Standard Deviation Stock A 6% 25% Stock B 12% 42% Risk free 5% 0 The correlation coefficient between A and B is -0.2. The investor maximizes a utility function U=E(r)−σ2 (i.e. she has a coefficient of risk aversion equal to 2). Assume that to maximize his utility when there is no available risk-free...
Question 12 1 pts A portfolio is composed of two stocks, A and B Stock A...
Question 12 1 pts A portfolio is composed of two stocks, A and B Stock A has a standard deviation of return of 24%, while stock Bhas a standard deviation of return of 18%. Stock A comprises 60% of the portfolio, while stock B comprises 40% of the portfolio. If the variance of return on the portfolio is.0350, the correlation coefficient between the returns on A and Bis 583 438 327 .225 • Previous Next Quiz saved at 10:34am Submit...
Problem 10. [10 pts]. Suppose Bank of America stock has a beta of 1.65, whereas Boeing...
Problem 10. [10 pts]. Suppose Bank of America stock has a beta of 1.65, whereas Boeing stock has a beta of 1.40. If the risk-free interest rate is 4% and the expected return of the market portfolio is 12%, according to the CAPM, (Show your calculations) a- What is the expected return of Bank of America stock? b- What is the expected return of Boeing stock? c-What is the beta of a portfolio that consists of 60% Bank of America...
Problem 10.[10 pts]. Suppose Bank of America stock has a beta of 1.65, whereas Boeing stock...
Problem 10.[10 pts]. Suppose Bank of America stock has a beta of 1.65, whereas Boeing stock has a beta a- b- c- d- of 1.40. If the risk-free interest rate is 4% and the expected return of the market portfolio is 12%, according to the CAPM, (Show your calculations) What is the expected return of Bank of America stock? What is the expected return of Boeing stock? What is the beta of a portfolio that consists of 60% Bank ofAmerica...
Problem 11. [4 pts] Emily DiDonato is thinking of buying Berkshire Hathaway Inc. (BRK-B) priced at $200 per share. She assumes that that risk-free rate is about 5% and the market risk premium (MRP) is 10%. If she thinks, the stock will rise to $320 per share by the end of the year, what beta would it need to have for this expectation to be consistent with the CAPM? (Show your calculations) Problem 12. 4 pts] Taylor Hill wants to...
11. Since a small company is hard to finance and earn money, a government used to implement various policy of Inclusive finance to support their operations. In order to support this policy, each bank provide special borrowing rate for small companies to finance. The borrowing rate is 3% annually compounding, 2.6% semiannually compounding, 2.8% quarterly compounding, 1.5% semiannual rate, 0.75% quarterly rate for Bank A, Bank B, Bank C, Bank D, and Bank E respectively. Which bank will support mostly...
12 You want to create a portfolio equally as risky as the market, and you have $1,000,000 to invest. You must invest all of your money. Your portfolio already contains assets A and B, and you need to decide how much of asset C and of the risk-free asset to buy. More detailed information is given below: 5.25 points Asset Investment Stock A $ 280,000 Stock B $ 400,000 Stock C Risk-free asset Beta 0.95 1.20 1.45 eBook Print References...
Problem 9 Intro You have $100,000 to invest and want to choose between two stocks and the risk-free asset. Security Stock 1 Stock 2 Risk-free asset E() 0.0881 0.0807 0.04 Beta Investment 1.3 $20,000 1.1 ? You want your portfolio to be as risky as the market overall. Part 1 Attempt 1/5 for 10 pts. What is the expected return of your portfolio? 3+ decimals Submit
Question 12 1 pts A portfolio is composed of two stocks, A and B Stock A has a standard deviation of return of 24%, while stock Bhas a standard deviation of return of 18%. Stock A comprises 60% of the portfolio, while stock B comprises 40% of the portfolio. If the variance of return on the portfolio is.0350, the correlation coefficient between the returns on A and Bis 583 438 327 .225 • Previous Next Quiz saved at 10:34am Submit...
Problem 10. [10 pts]. Suppose Bank of America stock has a beta of 1.65, whereas Boeing stock has a beta of 1.40. If the risk-free interest rate is 4% and the expected return of the market portfolio is 12%, according to the CAPM, (Show your calculations) a- What is the expected return of Bank of America stock? b- What is the expected return of Boeing stock? c-What is the beta of a portfolio that consists of 60% Bank of America...
Problem 10.[10 pts]. Suppose Bank of America stock has a beta of 1.65, whereas Boeing stock has a beta a- b- c- d- of 1.40. If the risk-free interest rate is 4% and the expected return of the market portfolio is 12%, according to the CAPM, (Show your calculations) What is the expected return of Bank of America stock? What is the expected return of Boeing stock? What is the beta of a portfolio that consists of 60% Bank ofAmerica...
Most questions answered within 3 hours.
-
Based on how much or how little you have noticed in the media,
do you think...
asked 2 hours ago -
I calculate Rosetta Stone’s P/E ratio as 10x prior to a report
about future industry growth....
asked 3 hours ago -
What major physiological changes account for electrodermal
activity (as in during a lie-detector test)?
asked 4 hours ago -
You are going to sell fruits & vegetables at a local
roadside market. List separately and...
asked 5 hours ago -
Hows does water affect the digestion of fats ?
asked 7 hours ago -
A buffer that contains 0.41 M of a base, B and 0.21 M of its
conjugate...
asked 7 hours ago -
Pleaaaaaaaasssssse help me please please it's more important
:((((((((((((((((((((
CASE STUDY
Nissan Company
Nissan Motor Company,...
asked 7 hours ago -
Calculate the concentration of hydronium and hyroxide ions in 1)
2.0 mol/L HNO3 2) 0.5 mol/L...
asked 8 hours ago -
In a loop-the-loop ride a car goes around a vertical, circular
loop at a constant speed....
asked 8 hours ago -
50 grams each of water (18.015 g/mol) and ethylene glycol
(C2H6O2) (62.07 g/mol) are mixed. At...
asked 8 hours ago -
The life expectancy of sport utility vehicles follows a normal
distribution with a mean of 145.8...
asked 8 hours ago -
If an object with mass of 5 kg is pushed with a force of 552 N,...
asked 8 hours ago