You invest $600 in security A with a beta of 1.2 and $400 in security B with a beta of 0.90. The beta of the resulting portfolio is
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A: Optimum risk portfolio is 0.084Explanation:
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Q: What is the expected return of a portfolio that has $8,000 invested in S and $2,000 invested in T?…
A: The expected return of the portfolio can be calculated as:E(R_p) = R_f + β_p * (E(R_m) -…
Q: Suppose you have a portfolio that has $290 in stock A with a beta of 1.04, $1, 160 in stock B with a…
A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa)+(Bb*Wb)+(Br*Wr)+(Bs*Ws)whereBp =beta of…
Q: a) Suppose the risk-free rate is 7% and the expected rate of return on the market portfolio is 10%.…
A: The question is based on the concept of security valuation by use of the capital asset pricing model…
Q: You manage a risky portfolio with an expected return of 12% and a standard deviation of 24%.…
A: The objective of the question is to understand the concept of Capital Allocation Line (CAL) and…
Q: Your client decides to invest $60 million in Flama and $40 million in Blanca stocks. The risk-free…
A: The objective of the question is to calculate the weights of the stocks in the portfolio, the…
Q: The risk free rate is 4% and the expected rate of return on the market portfolio is 10%. A.…
A: Risk-free rate = 4% Expected rate of return on market = 10% The required rate of return on security…
Q: You manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 36%.…
A: Given, Expected return = 17% Standard deviation = 36% T-bill rate = 6%
Q: The risk-free rate is 4%, and the required return on the market is 12%. b. A portfolio invests 40%…
A: Portfolio return is the weighted average return of individual assets Portfolio return = (WeightA *…
Q: You are considering adding Gamma stock to your portfolio. What is the required return on the stock…
A: Required return: It is the return that is accepted by an investor for holding a stock of a…
Q: security A and B is 0.25. The risk free rate is 3%. The weight of security A in the tangency…
A: Risk and return are essential financial principles. The term “risk” refers to the uncertainty and…
Q: You invest $700 in a security with a beta of 1.4 and $300 in another security with a beta of 0.8.…
A: You have invested $700 in a security with a beta of 1.4.You have invested $300 in another security…
Q: Your portfolio has a beta of 1.24, a standard deviation of 14.3 percent, and an expected return of…
A: Portfolio beta = 1.24 Standard deviation = 14.3% Expected return = 12.50% Market return = 10.7% Risk…
Q: You are considering investing $1,000 in a complete portfolioin a T - bill that pays a rate of return…
A: A portfolio is an assortment or mixture of investments, cash, stocks, bonds, and other financial…
Q: Suppose you have a portfolio of Vestel and Turkcell with a beta of 1.8 and 0.9, respectively. If you…
A: The Answer states the computation of Portfolio Beta by taking the weighted average of individual…
Q: Assume you wish to construct a portfolio by investing $4000 in Stock A which has a return of 6% and…
A: Expected return of a portfolio is the sum of weighted average returns of individual stocks.
Q: The risk-free rate is 7% and the expected rate of return on the market portfolio is 11%. a.…
A: > Given that;> Risk free rate is 7%> Market return is 11%> The value of beta is 1.92
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A: The CAPM formula is used to calculate the expected returns of an asset. It is based on the idea of…
Q: Consider a security with a beta of 1.2, when the market risk premium is 5%, and the risk-free rate…
A: The capital asset pricing model (CAPM) refers to a model which calculates the required return, or…
Q: Suppose the assumption behind that the CAPM hold. The risk free rate is 2% and the expected return…
A:
Q: You want to create a portfolio equally as risky as the market, and you have $5M to invest. Given the…
A: Calculate the weight of the risk-free asset:We know the weights of stock A and B since their…
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A: As per CAPM approach required return is equal to risk free rate plus beta times market risk premium…
Q: You currently have $100,000 invested in a portfolio that has an expected return of 10% and a…
A: To solve this, we can use the concepts of combining risky and risk-free assets in a portfolio to…
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A: Portfolio return, risk and the optimal portfolio: The portfolio return is the sum of the products of…
Q: You still have $14,000 invested in TGT and $8,000 invested in JCP. If the beta of TGT is 0.65 and…
A: Portfolio refers to basket of different financial assets in which investment is made by single…
Q: You have been managing a $5 million portfolio that has a beta of 1.2 and a required rate of return…
A: Rate of return- Return is the profit that we earn when we drive investment. It represents the reward…
Q: You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5…
A: This consists of two parts: In the first part we need to calculate the beta of the portfolio. In the…
Q: The investor has R60,000 to invest. R15,000 will be invested into the market portfolio, R10,000 into…
A: Portfolio beta is the weighted sum of the beta of individual securities in the portfolio.It measures…
Q: You are examining a portfolio manager’s active investing portfolio. The portfolio has a beta of 2…
A: The expected return is the minimum required rate of return which an investor required from the…
Q: The beta on risky asset A is 1.8 and the beta on risky asset B is 1.1. The expected return on the…
A: As Capital Asset pricing Model hold good, Expected Return of Stock = Risk Free rate + (market rate…
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I got a different answer. Is the answer 1.08?
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