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Lucas builds a portfolio by investing in two stocks only: Google (GOOG) and Motorola (MSI). According...
Lucas builds a portfolio by investing in two stocks only: Google (GOOG) and Motorola (MSI). According to the CAPM, the expected risk premium (i.e., the expected return minus the risk-free rate) of GOOG is 10.48% and the expected risk premium of MSI is 6.46%. The beta of GOOG is equal to 1.42. If Lucas puts 68% of his money in GOOG stock and 32% in MSI stock, what is the approximate beta of his portfolio? Bp = Number (Please round...
1. The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term annual return of 8%. The expected return of the market index is RM = 17.9%, the volatility of the market index is σM = 9.5%, and the risk-free asset earns Rf = 5.2%. The CFO has studied similar projects of other companies and believes that the covariance between the returns of this project and the...
Please be careful with roundings :) Thanks! The CFO of MediSearch plc believes that investing into a project which will develop a new drug for fighting the flu virus, promises a long-term annual return of 10%. The expected return of the market index is RM = 14.4%, the volatility of the market index is OM = 12%, and the risk-free asset earns R = 4.8%. The CFO has studied similar projects of other companies and believes that the covariance between...