Riley Stein estimates the expected returns for Cromarty LTD and Tindall Cos to be 13.6% and 9.4% respectively. She wants to build a portfolio with an expected return of 10.75%. The weight of Cromarty in the portfolio should be:

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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1. Do not do any interim rounding, calculate values to 6 decimal places before converting to percentages, state the answer as a percentage to two places, do not use labels (%, $). For example, if the value is 0.06458, the answer is 6.46. Riley Stein estimates the expected returns for Cromarty LTD and Tindall Cos to be 13.6% and 9.4% respectively. She wants to build a portfolio with an expected return of 10.75%. The weight of Cromarty in the portfolio should be:

2.Based on the Capital Asset Pricing Model assuming the securities are correctly priced and given the following information, what is the return on the market? Security Beta Expected Return Katmai Outfitters 0.74 0.087 Wrangell Adventures 1.63 0.159

3.Greg Noronha has been told the expected return on Merchants Bank is 9.75%, He knows the risk-free rate is 1.9%, the market risk premium is 6.75%, and Merchants' beta is 1.15. Based on the Capital Asset Pricing Model, Merchants Bank is: overvalued?

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