Suppose you have a portfolio that is 30% in the risk-free asset and 70% in a...
Suppose you have a portfolio that is 30% in the risk-free asset and 70% in a stock. The stock has a standard deviation of 0.30 (i.e., 30%). What is the standard deviation of the portfolio?
a) 0.30 (30%)
B) 0.09 (9%)
C) 0.21 (21%)
D) 0
Homework Answers
Standard deviation of portfolio is mathematically represented as:
STandard deviation of risk free asset and its correlation with any other stock returns' is = 0
(Option C)
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Suppose you have a portfolio that is 30% in the risk-free asset
and 70% in a...
show work (10. You own a portfolio with 50% invested in a risk-free asset, 30% in...
show work
(10. You own a portfolio with 50% invested in a risk-free asset, 30% in stock A with a beta of 1.5 and 20% in stock B. Your portfolio has the same expected return as the market portfolio. What is the beta of stock B? (The risk-free rate is 5%). a. 0.43 b. 1.00 c. 1.73 d. 1.85 0.20+1.50 e. 2.75
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free a...
You have been provided the following data about the securities
of three firms, the market portfolio, and the risk-free asset:
a.
Fill in the missing values in the table.
* With the market portfolio
b-1.
What is the expected return of Firm A?
b-2.
What is the expected return of Firm B?
b-3.
What is the expected return of Firm C?
Security Expected Return Standard Deviation Correlation* Beta 0.21 Firm A 0.120 0.96 Firm B 0.130 040 1.51 Firm C...
You have a portfolio comprising of 30 percent of Stock A and 70 percent of stock...
You have a portfolio comprising of 30 percent of Stock A and 70 percent of stock B. What is the portfolio Standard Deviation? Economy State Probability E(R)-A E(R)-B Boom 0.30 20% 14% Normal 0.60 11% 9% Recession 0.10 -23% -5%
Suppose you want to invest $ 1 million and you have two assets to invest in: Risk free asset with...
Suppose you want to invest $ 1 million and you have two assets to invest in: Risk free asset with return of 12% per year and a risky asset with expected return of 30% and standard deviation of 40%. If you want a portfolio with standard deviation of 30% how much do you invest in each of the assets?
(a) Suppose that the CAPM holds. Consider stocks A, B, C and D plotted in the graph below together with portfolios X, T (the tangency or market portfolio), Z, and the risk-free asset S. No explanation...
(a) Suppose that the CAPM holds. Consider stocks A, B, C and D
plotted in the graph below together with portfolios X, T (the
tangency or market portfolio), Z, and the risk-free asset S. No
explanation necessary.
(i) If you could invest in the risk-free asset S and only one of
the stocks A, B, C or D, which stock would you choose?
(ii) Which of the stocks, A, B, C, or D, has the highest
beta?
(iii) Which of...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 9 percent and a standard deviation of 16 percent. The risk-free rate is 4.1 percent and the expected return on the market portfolio is 11 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .38 correlation with the market portfolio and a standard deviation of 60 percent?
You have a $9,000 portfolio which is invested in stocks A, B, and a risk-free asset....
You have a $9,000 portfolio which is invested in stocks A, B, and a risk-free asset. $4,000 is invested in stock A. Stock A has a beta of 1.84 and stock B has a beta of 0.68. How much needs to be invested in stock B if you want a portfolio beta of.95? Multiple Choice $0 $1,750 $5,000 $3,279 $7,279
Given that the risk-free rate is 5%, the expected return on the market portfolio is 20%,...
Given that the risk-free rate is 5%, the expected return on the market portfolio is 20%, and the standard deviation of returns to the market portfolio is 20%, answer the following questions: c. Now suppose that you want to have a portfolio, which pays 25% expected return. What is the weight in the risk free asset and in the market portfolio? d. What do these weights mean: What are you doing with the risk free asset and what are you...
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free...
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter o wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Expected Return Standard Deviation Security Correlation* Beta Firm A 0.120 0.21 0.96 Firm B 0.40 0.130 1.51 Firm C The market portfolio 0.111 0.76...
Suppose that you have a risky asset that provides you with an expected return of 12%...
Suppose that you have a risky asset that provides you with an expected return of 12% per year with 20% volatility (standard deviation). Consider a risk-free asset that provides you with a 3% risk-free return. a. If you have $100,000 and invest 80% into the risky asset and 20% into the 6. b. How much will your portfolio be worth if the realized return on the risky c. If you cannot borrow money, what is the maximum possible expected return...
show work
(10. You own a portfolio with 50% invested in a risk-free asset, 30% in stock A with a beta of 1.5 and 20% in stock B. Your portfolio has the same expected return as the market portfolio. What is the beta of stock B? (The risk-free rate is 5%). a. 0.43 b. 1.00 c. 1.73 d. 1.85 0.20+1.50 e. 2.75
You have been provided the following data about the securities
of three firms, the market portfolio, and the risk-free asset:
a.
Fill in the missing values in the table.
* With the market portfolio
b-1.
What is the expected return of Firm A?
b-2.
What is the expected return of Firm B?
b-3.
What is the expected return of Firm C?
Security Expected Return Standard Deviation Correlation* Beta 0.21 Firm A 0.120 0.96 Firm B 0.130 040 1.51 Firm C...
(a) Suppose that the CAPM holds. Consider stocks A, B, C and D
plotted in the graph below together with portfolios X, T (the
tangency or market portfolio), Z, and the risk-free asset S. No
explanation necessary.
(i) If you could invest in the risk-free asset S and only one of
the stocks A, B, C or D, which stock would you choose?
(ii) Which of the stocks, A, B, C, or D, has the highest
beta?
(iii) Which of...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 9 percent and a standard deviation of 16 percent. The risk-free rate is 4.1 percent and the expected return on the market portfolio is 11 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .38 correlation with the market portfolio and a standard deviation of 60 percent?
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter o wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Expected Return Standard Deviation Security Correlation* Beta Firm A 0.120 0.21 0.96 Firm B 0.40 0.130 1.51 Firm C The market portfolio 0.111 0.76...
Suppose that you have a risky asset that provides you with an expected return of 12% per year with 20% volatility (standard deviation). Consider a risk-free asset that provides you with a 3% risk-free return. a. If you have $100,000 and invest 80% into the risky asset and 20% into the 6. b. How much will your portfolio be worth if the realized return on the risky c. If you cannot borrow money, what is the maximum possible expected return...
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