You have $100,000 that you want to invest in a risky asset portfolio; M. Portfolio M...
You have $100,000 that you want to invest in a risky asset portfolio; M. Portfolio M has an expected return of 20% and a standard deviation of 30%. You also want to borrow an extra $50,000 at a risk-free rate of 8% and invest in the risky portfolio. Calculate the expected return and standard deviation of this portfolio. What type of portfolio is this and what type of investors will invest in this portfolio?
Homework Answers
Expected return=1.5*20%-0.5*8%=26%
Standard Deviation=1.5*30%=45%
Leveraged Portfolio
Risk loving or risk neutral investors
Add Answer to:
You have $100,000 that you want to invest in a risky asset
portfolio; M. Portfolio M...
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...
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10% and a treasury bill with a rate of return of 5%. __________ of your complete portfolio should be invested in the risk-free asset if you want your complete portfolio to have a standard deviation of 9%.
You manage a risky portfolio with an expected return of 12% and a standard deviation of 24%. Assume that you can invest...
You manage a risky portfolio with an expected return of 12% and a standard deviation of 24%. Assume that you can invest and borrow at a risk-free rate of 3%, using T-bills. a. Draw the Capital Allocation Line (CAL) for this combination of risky portfolio and risk-free asset. What is the Sharpe ratio of the risky portfolio? b. Your client chooses to invest 50% of their funds into your risky portfolio and 50% risk-free. What is the expected return and...
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?
Problem 2 (15 points) You invest $1,000 in a complete portfolio. The complete portfolio is composed...
Problem 2 (15 points) You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky portfolio with an expected rate of return of 16% and a standard deviation of 20% and a treasury bill with a rate of return of 5%. a) what percentage of your complete portfolio should be invested in the risky portfolio il you want your complete portfolio to have a standard deviation of 9%? b) The slope of the capital allocation line...
You invest $3,000 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $3,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 15% and a standard deviation of 20% and a Treasury bill with a rate of return of 10%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 8%. rev: 02_12_2013_QC_26430 17% 5% 37% 40%
You invest $1,200 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $1,200 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 20% and a Treasury bill with a rate of return of 4%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 7%.
You invest $1,900 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $1,900 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 18% and a Treasury bill with a rate of return of 3%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 9%.
You invest $100 in a portfolio. The portfolio is composed of a risky asset with an...
You invest $100 in a portfolio. The portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 15% and a Treasury bill with a rate of return of 5%. What proportion of your total portfolio should be invested in the risky asset to form a portfolio with an expected rate of return of 9%?
You invest $100 in a portfolio. The portfolio is composed of a risky asset with an...
You invest $100 in a portfolio. The portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 15% and a Treasury bill with a rate of return of 5%. What proportion of your total portfolio should be invested in the risky asset to form a portfolio with an expected rate of return of 9%?
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...
Problem 2 (15 points) You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky portfolio with an expected rate of return of 16% and a standard deviation of 20% and a treasury bill with a rate of return of 5%. a) what percentage of your complete portfolio should be invested in the risky portfolio il you want your complete portfolio to have a standard deviation of 9%? b) The slope of the capital allocation line...
Most questions answered within 3 hours.
-
284 mL of a 0.52 M potassium hydroxide solution is added to 467
mL of a...
asked 19 minutes ago -
exercise on VSEPR and molecular structrue.
octahedral
SeCl62-
TeCl62-
ClF62-
distorted
SeF62–
IF6–
asked 20 minutes ago -
Little’s Law: Val d’Costa is a world famous ski village in the
French Alps. Because of...
asked 1 hour ago -
Find the absolute error D for the calculation if A + B/C=D A=
9.4 +/- 0.4...
asked 1 hour ago -
New Air Heating and Cooling, manufactures furnaces and central
air units. The company pride itself on...
asked 1 hour ago -
A coach uses a new technique to train gymnasts. Seven
gymnasts were randomly selected and their...
asked 3 hours ago -
While rotating the tires on your car you notice a rock [mass =
0.1 Kg] stuck...
asked 5 hours ago -
Using MARS simulator, write MIPS programs according to
the following scenarios: Receive a positive integer number...
asked 7 hours ago -
An object in front of a concave mirror has a real image that is
11.5 cm...
asked 7 hours ago -
Consider the reaction, C3 H8 + O2 --> CO2 + H2O. How many
moles of O2...
asked 9 hours ago -
You and your opponent both roll a fair die. If you both roll the
same number,...
asked 9 hours ago -
In a study of the accuracy of fast food drive-through orders,
Restaurant A had 257 accurate...
asked 9 hours ago