Asset W has expected return of 11.6% and a beta of 1.23. If the risk free rate is 3.15%, complete the following table for portfolios of asset W, and a risk free asset. Illustrate the relationship between portfolio, expected return and portfolio beta by plotting the expected returns against the betas in a graph. What is the slope of the line that results? Results are in the table I just need the excel graph!!!! Percentage of portfolio asset in W. Portfolio expected return. Portfolio beta. 0% = (0 x 0.116) + (1 x 0.0315) = 3.15% 0 25% = (0.25 x 0.116) + (0.75 x 0.0315) = 5.26% = 1.23 x 0.25 = 0.3075 50% = (0.50 x 0.116) + (0.50 x 0.0315) = 7.37% = 1.23 x 0.50 = 0.615 75% = (0.75 x 0.116) + (0.25 x 0.0315) = 9.48% = 1.23 x 0.75 = 0.9225 100% = (1 x 0.116) + (0 x 0.0315) = 11.6% = 1.23 x 1 = 1.23 125% = (1.25 x 0.116) + (-0.25 x 0.0315) = 13.71% = 1.23 x 1.25 = 1.5375 150% = (1.50 x 0.116) + (-0.50 x 0.0315) = 15.82% = 1.23 x 1.50 = 1.845
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
Asset W has expected return of 11.6% and a beta of 1.23. If the risk free rate is 3.15%, complete the following table for portfolios of asset W, and a risk free asset. Illustrate the relationship between portfolio, expected return and portfolio beta by plotting the expected returns against the betas in a graph. What is the slope of the line that results?
Results are in the table I just need the excel graph!!!!
|
Percentage of portfolio asset in W. |
Portfolio expected return. |
Portfolio beta. |
|
0% |
= (0 x 0.116) + (1 x 0.0315) = 3.15% |
0 |
|
25% |
= (0.25 x 0.116) + (0.75 x 0.0315) = 5.26% |
= 1.23 x 0.25 = 0.3075 |
|
50% |
= (0.50 x 0.116) + (0.50 x 0.0315) = 7.37% |
= 1.23 x 0.50 = 0.615 |
|
75% |
= (0.75 x 0.116) + (0.25 x 0.0315) = 9.48% |
= 1.23 x 0.75 = 0.9225 |
|
100% |
= (1 x 0.116) + (0 x 0.0315) = 11.6% |
= 1.23 x 1 = 1.23 |
|
125% |
= (1.25 x 0.116) + (-0.25 x 0.0315) = 13.71% |
= 1.23 x 1.25 = 1.5375 |
|
150% |
= (1.50 x 0.116) + (-0.50 x 0.0315) = 15.82% |
= 1.23 x 1.50 = 1.845 |
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