You invest $1,017 portfolio holding a risky asset and a Treasury bill. You expect the portfolio to reach a value of $1,129 in 1 year. Expected Return of Risky Asset: 16% Standard Deviation of Risky Assets: 10% Expected Return of Treasury Bill: 3% This is only possible if the weight of the risky asset is *Please round to the nearest two decimals. *Please state your answer as percentage and not as decimal (i.e. 40 and not 0.40) *Please do not use the symbol %

You invest $1,017 portfolio holding a risky asset and a Treasury bill. You expect the portfolio to reach a value of $1,129 in 1 year. Expected Return of Risky Asset: 16% Standard Deviation of Risky Assets: 10% Expected Return of Treasury Bill: 3% This is only possible if the weight of the risky asset is Please round to the nearest two decimals. Please state your answer as percentage and not as decimal (i.e. 40 and not 0.40) *Please do not use the symbol %

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

Section: Chapter Questions

Problem 1PS

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Asset W has an expected return of 12.6 percent and a beta of 1.25. If the risk-free rate is 4.6 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your expected returns as a percent rounded to 2 decimal places, e.g., 32.16, and your beta answers to 3 decimal places, e.g., 32.161.) Percentage of Portfolio in Asset W 0% 25 50 75 100 125 150 - Slope of the line Portfolio Expected Return % % % % % % % If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Portfolio Beta %
You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta А $250,000 1.25 B 200,000 1.70 с 400,000 0.85 D 150,000 -0.25 Total investment $1,000,000 The market's required return is 10% and the risk-free rate is 3%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places. %
You invest $96 in a risky asset and the T-bill. The risky asset has an expected rate of return of 19% and a standard deviation of 0.22, and a T-bill with a rate of return of 4%. A portfolio that has an expected outcome of $110 is formed by investing what dollar amount in the risky asset? Round your answer to the nearest cent (2 decimal places).
State the return rate (in %) for your optimal portfolio.
Nikul
2. An investor is evaluating a two-asset portfolio of the following two securities. Portfolio A: 75% Ooredoo and 25% Woqod Portfolio B: Investor has QAR 100,000 and will invest QAR 50,000 in Woqod Expected returns and risks: ● ● ● ● Expected Return 12.50% Woqod 10.80% The correlation between Ooredoo and Woqod is 0.72. Calculate: a. Expected return of both the portfolios Security Ooredoo Expected Risk (0) 26.40% 22.50%
Which of the following is correct? O A. Common stock valuation usually treats the common stock as a perpetuity. OB. The appropriate measure for risk according to the capital asset pricing model is beta. OC. The present value of a $100 perpetuity discounted at 5% is $2,000. OD. The incremental cost is the cost of making a choice defined in terms of the next best alternative that is foregone. OE. Both B and C.
Consider a portfolio that offers an expected rate of return of 11% and a standard deviation of 26%. T-bills offer a risk-free 7% rate of return. What is the maximum level of risk aversion for which the risky portfolio is still preferred to T-bills? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Consider a position consisting of 200,000 investment in asset A and 300,000 investment in asset B. Assume that the daily volatility of the assets are 1.5% and 1.8% respectively, and that coefficient of correlation between their returns is 0.4. What is the five day 95% VAR for the portfolio (given 95% confidence level represents 1.65 standard deviations on the left side of the normal distribution)?
You want to create a portfolio equally as risky as the market, and you have $250,000 to invest. Given this information, fill in the three missing pieces of information in the following table. Show your calculations: Investment Betal 0.90 Asset Stock A $50,000 Stock B $70,000 Stock C Risk-Free Asset 1.25 1.60
Asset W has an expected return of 12.3 percent and a beta of 1.2. If the risk-free rate is 4 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your expected return answers as a percent rounded to 4 decimal places, e.g., 32.1623, and beta answers to 3 decimal places, e.g., 32.161.) > Answer is complete but not entirely correct. Percentage of Portfolio in Asset W % 0 25 50 75 100 125 150 Portfolio Expected Return 4.0000 % 6.0750X % 8.1500 X % 10.2250 % 12.3000 x % 14.3750 % 16.4500 X % Portfolio Beta 0 0.300 0.600 0.900 1.200 1.500 1.800

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