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D Question 12 1 pts Consider a Treasury bill with a rate of return of 5%...
Consider a Treasury bill with a rate of return of 5% and the following risky securities: Security A: E(r) = .15; varianc...
Consider a Treasury bill with a rate of return of 5% and the following risky securities: Security A: E(r) = .15; variance = .0400 Security B: E(r) = .10; variance = .0225 Security C: E(r) = .12; variance = .1000 Security D: E(r) = .13; variance = .0625 The investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. The security the investor should choose as part of her complete portfolio to...
5 Consider a Treasury bill with a rate of return of 5% and the following risky...
5 Consider a Treasury bill with a rate of return of 5% and the following risky securities: Security A: E/) = .15; variance = .0400 Security B: En = 10; variance = .0225 Security C: 1) = .12; variance = 1000 Security D: 0) = .13; variance = .0625 The investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. The security the investor should choose as part of her complete portfolio...
. The Treasury bill rate (i.e. risk-free rate) is 2.5%, and the expected return on the...
. The Treasury bill rate (i.e. risk-free rate) is 2.5%, and the expected return on the market portfolio is 12%. Using the capital asset pricing model: a. What is the risk premium on the market? b. What is the required rate of return on an investment with a beta of 1.15? c. If an investment with a beta of 0.80 offers an expected return of 10.5%, does it have a positive NPV?
answer all. For the next question, assume an investor with the following utility function U-E)-3/2) 12. To maximize her expected uility, she would choose the set with an espect rate of return of...
answer all.
For the next question, assume an investor with the following utility function U-E)-3/2) 12. To maximize her expected uility, she would choose the set with an espect rate of return of and a standard deviation ofrspectively A. 1296; 20% B. 10%; 15% C. 1056; 1056 D, 8%, 10% Е.none ofthe above 13. Which of the following statements regarding the Capital Allocation Line (CAL) false? A. The CAL shows risk-return combinations. B. The slope of the CAL equals the...
Question 5 1 pts The rate of return on the 4 week treasury is .5%, the...
Question 5 1 pts The rate of return on the 4 week treasury is .5%, the rate of return on a 9 week treasury is 75%, and the rate of return on a 13 week treasury is 1.25%. What is the risk free rate? Answer with a number and not a percent sign. For example if you think the answer is 2%, enter 2
please answer all question!! thank you 14. A Treasury bill pays a 6% rate of return....
please answer all question!! thank you
14. A Treasury bill pays a 6% rate of return. A risk averse investor invest in a risky portfolio with a 50% probability of earning a 10% return and a 50% probability of earning only 2% - a. might; because she is rewarded a risk premium. b. would not; the investor is not rewarded any risk premium. would not; the risk premium is too small. cannot be determined from the information provided. c. 15....
1. (45 pts) Consider an investment environment consisting of two stock portfolios with the following information:...
1. (45 pts) Consider an investment environment consisting of two stock portfolios with the following information: Canada (C United States (US) Mean E(r) 0.13 0.159 St.Dov. σ 0.1512 0.241 Correlation Coefficient: 0.48, Risk-free rate: 6% (a) (20 pts) Compute the weights for the optimal risky portfolio. Caleulate its Expected return and variance. (b(5 pts) What is the slope of the Captal Allocation Line (CAL) in this environment? (c) (20 pts) Suppose you are an investor with risk aversion coellicient A...
6. Consider the following information for Stocks 1 and 2: Expected Standard Stock Return Deviation 1...
6. Consider the following information for Stocks 1 and 2: Expected Standard Stock Return Deviation 1 20% 40% 2 12% 20% NE a. The correlation between the returns of these two stocks is 0.3. How will you divide your money between Stocks 1 and 2 if your aim is to achieve a portfolio with an expected return of 18% p.a.? That is, what are the weights assigned to each stock? Also take note of the risk (i.e., standard deviation) of...
The risk free rate on Treasury bill is 2%. The annual rate of return onn the...
The risk free rate on Treasury bill is 2%. The annual rate of return onn the DowJones market index is 7%. You are considering a stock with a beta that is 30% more volatile than the overall market beta. What is the minimum level of annual return that you would require on this investment? Choose one of the following A) 5.5% B) 2% C) 8.5% D) 6.5% E) 5%
The Treasury bill rate is 4%, and the expected return on the market portfolio is 11%....
The Treasury bill rate is 4%, and the expected return on the market portfolio is 11%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the required return on an investment with a beta of 1.6? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.8 offers an expected return of 8.6%, does it have...
5 Consider a Treasury bill with a rate of return of 5% and the following risky securities: Security A: E/) = .15; variance = .0400 Security B: En = 10; variance = .0225 Security C: 1) = .12; variance = 1000 Security D: 0) = .13; variance = .0625 The investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. The security the investor should choose as part of her complete portfolio...
answer all.
For the next question, assume an investor with the following utility function U-E)-3/2) 12. To maximize her expected uility, she would choose the set with an espect rate of return of and a standard deviation ofrspectively A. 1296; 20% B. 10%; 15% C. 1056; 1056 D, 8%, 10% Е.none ofthe above 13. Which of the following statements regarding the Capital Allocation Line (CAL) false? A. The CAL shows risk-return combinations. B. The slope of the CAL equals the...
Question 5 1 pts The rate of return on the 4 week treasury is .5%, the rate of return on a 9 week treasury is 75%, and the rate of return on a 13 week treasury is 1.25%. What is the risk free rate? Answer with a number and not a percent sign. For example if you think the answer is 2%, enter 2
please answer all question!! thank you
14. A Treasury bill pays a 6% rate of return. A risk averse investor invest in a risky portfolio with a 50% probability of earning a 10% return and a 50% probability of earning only 2% - a. might; because she is rewarded a risk premium. b. would not; the investor is not rewarded any risk premium. would not; the risk premium is too small. cannot be determined from the information provided. c. 15....
1. (45 pts) Consider an investment environment consisting of two stock portfolios with the following information: Canada (C United States (US) Mean E(r) 0.13 0.159 St.Dov. σ 0.1512 0.241 Correlation Coefficient: 0.48, Risk-free rate: 6% (a) (20 pts) Compute the weights for the optimal risky portfolio. Caleulate its Expected return and variance. (b(5 pts) What is the slope of the Captal Allocation Line (CAL) in this environment? (c) (20 pts) Suppose you are an investor with risk aversion coellicient A...
6. Consider the following information for Stocks 1 and 2: Expected Standard Stock Return Deviation 1 20% 40% 2 12% 20% NE a. The correlation between the returns of these two stocks is 0.3. How will you divide your money between Stocks 1 and 2 if your aim is to achieve a portfolio with an expected return of 18% p.a.? That is, what are the weights assigned to each stock? Also take note of the risk (i.e., standard deviation) of...
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