Use the table for the question(s) below. Consider the following three individuals portfolios consisting of investments...
Use the table for the question(s) below. Consider the following three individuals portfolios consisting of investments in four stocks:
|
Stock |
Beta |
Peter's Investment |
Paul's Investment |
Mary's Investment |
|
Eenie |
1.3 |
2500 |
5000 |
10,000 |
|
Meenie |
1.0 |
2500 |
5000 |
10,000 |
|
Minie |
0.8 |
2500 |
5000 |
minus−5000 |
|
Moe |
−0.5 |
2500 |
minus−5000 |
minus−5000 |
Assuming that the risk−free rate is 4% and the expected return on the market is 12%, then required return on Peter's Portfolio is closest to:
A.8%
B.12%
C.9%
D.10%
Homework Answers
Add Answer to:
Use the table for the question(s) below. Consider the following
three individuals portfolios consisting of investments...
You are interested in investing in a portfolio including stocks A, B, C and D. You...
You are interested in investing in a portfolio including stocks A, B, C and D. You have talked to three different financial strategists: Dan, Paul and Mary. Assuming that the risk-free rate is 4% and the expected return on the market is 12%, based on the below data from each strategist, which one will you go with? Explain why that would be your decision (choose one person). (Hint: the negative investments would be "short-selling" as explained in the text). Stock...
15. Estimate the Sharpe, Treynor and Alpha Jensen's performance analyses fort the three portfolios below. Use...
15. Estimate the Sharpe, Treynor and Alpha Jensen's performance analyses fort the three portfolios below. Use the data below to complete the table. Portfolio Sharpe Treynor Jensen's Return 0.07 0.085 0.11 SD 0.15 0.12 0.095 Beta 0.8 1.05 1.4 Z 0.075 Market Risk Free 0.075 0.025 a. If you were to choose one portfolio, which one would it be? Why?
Part D and E please 2. Consider the information in Table 1. Table 1 Correlation with...
Part D and E please
2. Consider the information in Table 1. Table 1 Correlation with market portfolio 0.20 0.80 1.00 0.00 Standard deviation Return Beta Stock 1 Stock 2 Market portfolio Risk-free asset 5% 12% 8% 0% 16% 2% 0 (a) Consider Table 1. Calculate betas for stock I and stock 2 (b) Consider Table 1. Compute the equilibrium expected return according to the CAPM for stocks 1 and 2 (c) Consider Table 1 and the equilibrium expected returns...
5.2 Risk premium Consider a portfolio consisting of the following three stocks: The volatility of the...
5.2 Risk premium Consider a portfolio consisting of the following three stocks: The volatility of the market portfolio is Correlation with the Market Portfolio 0.35 0.52 0.54 Volatility 13% 28% 11% Portfolio weight 0.26 0.29 0.45 EC Cor Green Midget Alive And Well 10% and it has an expected return of 8%. The risk-free rate is 3% 1. Compute the beta and 2. Using your answer from question (1), calculate the expected return of the portfolio 3. What is the...
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...
Question 3 (0.4 points) The following data are available for three portfolios and the market for...
Question 3 (0.4 points) The following data are available for three portfolios and the market for a recent 10-year period. Which portfolio has highest Jensen's alpha conditioning on CAPM risk-adjusted return? Portfolio Return (%) Std.Dev. (%) Beta 1 14 21 1.15 2 16 24 1.00 3 20 28 1.25 S&P 500 12 20 Risk-free rate 4 3 O2 S&P 500 1
I would like part d and e answered please 2. Consider the information in Table 1...
I would like part d and e answered please
2. Consider the information in Table 1 Table 1 Correlation with market portfolio 0.20 0.80 1.00 0.00 Standard deviation Return Beta Stock 1 Stock 2 Market portfolio 6% 12% 8% 0% 16% 2% Risk-free asset 0 (a) Consider Table 1. Calculate betas for stock 1 and stock 2. (b) Consider Table 1. Compute the equilibrium expected return according to the CAPM for stocks 1 and 2. (c) Consider Table 1 and...
Subject Investment [20] QUESTION FIVE 5.1 Using the following information for Poimex's portfolios, answer question 5.1.1...
Subject Investment
[20] QUESTION FIVE 5.1 Using the following information for Poimex's portfolios, answer question 5.1.1 and 5.12 that follow: Primex invested R2 000 000 in a portfolio with the following characteristics: Description of share/bond Investment (R) Beta Retail R400 000 0.8 Industrial R500 000 1.5 Resources R686 000 1.8 Risk-free asset R414 000 0 5.2 The return on the market is 17% and the risk free rate is 8%. 5.1.1 Calculate the Beta for Poimex's portfolio 5.1.2 Calculate the...
-9 points UTPBFIN1 III.E.016. Consider a portfolio consisting of the following three stocks. Portfolio Weight Volatility...
-9 points UTPBFIN1 III.E.016. Consider a portfolio consisting of the following three stocks. Portfolio Weight Volatility Correlation with the market portfolio HEC Corp 0.45 12 0.7 Green Midget yer 02 25% 0.5 AliveAnd well 0.35 134 0.6 The volatility of market portfolio is 10% and it has an expected return of 3%. The risk-free rate is 39 (a) Compute the beta of each stock (rounded to 4 decimal places) HEC Corp Green Midget AliveAnd Well (b) Compute the expected return...
Wilson holds a portfolio that invests equally in three stocks (WAWBWc following table: 1/3). Each...
Wilson holds a portfolio that invests equally in three stocks (WAWBWc following table: 1/3). Each stock is described in the Stock Beta Standard Deviation Expected Return A 0.5 23% 38% 45% 7.5% 12.0% 14.0% C 2.0 An analyst has used market- and firm-specific information to generate expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns. You've also determined that the risk-free rate [Rr] is 4%, and the market risk...
15. Estimate the Sharpe, Treynor and Alpha Jensen's performance analyses fort the three portfolios below. Use the data below to complete the table. Portfolio Sharpe Treynor Jensen's Return 0.07 0.085 0.11 SD 0.15 0.12 0.095 Beta 0.8 1.05 1.4 Z 0.075 Market Risk Free 0.075 0.025 a. If you were to choose one portfolio, which one would it be? Why?
Part D and E please
2. Consider the information in Table 1. Table 1 Correlation with market portfolio 0.20 0.80 1.00 0.00 Standard deviation Return Beta Stock 1 Stock 2 Market portfolio Risk-free asset 5% 12% 8% 0% 16% 2% 0 (a) Consider Table 1. Calculate betas for stock I and stock 2 (b) Consider Table 1. Compute the equilibrium expected return according to the CAPM for stocks 1 and 2 (c) Consider Table 1 and the equilibrium expected returns...
5.2 Risk premium Consider a portfolio consisting of the following three stocks: The volatility of the market portfolio is Correlation with the Market Portfolio 0.35 0.52 0.54 Volatility 13% 28% 11% Portfolio weight 0.26 0.29 0.45 EC Cor Green Midget Alive And Well 10% and it has an expected return of 8%. The risk-free rate is 3% 1. Compute the beta and 2. Using your answer from question (1), calculate the expected return of the portfolio 3. What is the...
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...
Question 3 (0.4 points) The following data are available for three portfolios and the market for a recent 10-year period. Which portfolio has highest Jensen's alpha conditioning on CAPM risk-adjusted return? Portfolio Return (%) Std.Dev. (%) Beta 1 14 21 1.15 2 16 24 1.00 3 20 28 1.25 S&P 500 12 20 Risk-free rate 4 3 O2 S&P 500 1
I would like part d and e answered please
2. Consider the information in Table 1 Table 1 Correlation with market portfolio 0.20 0.80 1.00 0.00 Standard deviation Return Beta Stock 1 Stock 2 Market portfolio 6% 12% 8% 0% 16% 2% Risk-free asset 0 (a) Consider Table 1. Calculate betas for stock 1 and stock 2. (b) Consider Table 1. Compute the equilibrium expected return according to the CAPM for stocks 1 and 2. (c) Consider Table 1 and...
Subject Investment
[20] QUESTION FIVE 5.1 Using the following information for Poimex's portfolios, answer question 5.1.1 and 5.12 that follow: Primex invested R2 000 000 in a portfolio with the following characteristics: Description of share/bond Investment (R) Beta Retail R400 000 0.8 Industrial R500 000 1.5 Resources R686 000 1.8 Risk-free asset R414 000 0 5.2 The return on the market is 17% and the risk free rate is 8%. 5.1.1 Calculate the Beta for Poimex's portfolio 5.1.2 Calculate the...
-9 points UTPBFIN1 III.E.016. Consider a portfolio consisting of the following three stocks. Portfolio Weight Volatility Correlation with the market portfolio HEC Corp 0.45 12 0.7 Green Midget yer 02 25% 0.5 AliveAnd well 0.35 134 0.6 The volatility of market portfolio is 10% and it has an expected return of 3%. The risk-free rate is 39 (a) Compute the beta of each stock (rounded to 4 decimal places) HEC Corp Green Midget AliveAnd Well (b) Compute the expected return...
Wilson holds a portfolio that invests equally in three stocks (WAWBWc following table: 1/3). Each stock is described in the Stock Beta Standard Deviation Expected Return A 0.5 23% 38% 45% 7.5% 12.0% 14.0% C 2.0 An analyst has used market- and firm-specific information to generate expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns. You've also determined that the risk-free rate [Rr] is 4%, and the market risk...
Most questions answered within 3 hours.
-
Events A and B are independent. Suppose event A occurs with
probability 0.63 and event B...
asked 2 minutes ago -
Rubies are essentially alumina Al2O3 with a contaminant of
chromium in the form of Cr2O3. A...
asked 9 minutes ago -
Write a full program that will accept
exactly three command line arguments
that can be interpreted as...
asked 11 minutes ago -
1.histones are proteins that make up nucleosomes. they bind to
the backbone of DNA in chromosomes....
asked 21 minutes ago -
What is the relationship between a variables value and their
probabilities as it is summarized by...
asked 29 minutes ago -
Balance Sheet
DR
CR
Cash
10000
AR
7000
Supplies
500
Equipment
5,000
Accum depreciation
...
asked 27 minutes ago -
Country
Continent
GDP (millions of US$)
Afghanistan
Asia
 
asked 30 minutes ago -
1) Use the Euclidean algorithm (write in pseudocode) to find the
greatest common divisor of 8...
asked 53 minutes ago -
Based upon the corporate proposal for this week, research three
different data storage options for your...
asked 54 minutes ago -
The equilibrium constant, Kp , for the following reaction is
1.04×10-2 at 548 K. NH4Cl(s) NH3(g)...
asked 1 hour ago -
During a recent budgeting discussion, the CFO at "NW Accounting
Services" proposed eliminating the marketing research...
asked 1 hour ago -
Block B has a mass of 3.80kg and is moving to the left at a
speed...
asked 1 hour ago