You invest $700 in a security with a beta of 1.4 and $300 in another security with a beta of 0.8. The beta of the resulting portfolio is _________ Group of answer choices a. 1.40 b. 1.00 c. 0.36 d. 1.22 e. 0.80

Q: With the assistance of an annotated graph, explain when a security is overpriced, under-priced or…

A: The question is based on the concept of capital asset pricing model (CAPM) and security market line.

Q: 3. Asset 1 has an expected return of 10% with a standard deviation of 25%, and asset 2 has an…

A: To find the optimal portfolio consisting of risky assets and risk-free asset we can use the Capital…

Q: Woidtke Manufacturing's stock currently sells for $25 a share. The stock just paid a dividend of…

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Q: What is Nico's portfolio beta if he invests an equal amount in Asset X with a beta of 0.60, Asset Y…

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Q: Assume that your client would prefer to invest her entire wealth into a portfolio with an annual…

A: To determine the optimal allocation, y, we need to use the Capital Market Line (CML) equation, which…

Q: You can invest in the risk-free security (T-Bill) and only one of the following three risky…

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Q: Suppose you are an investor with a choice between three securities that are identical in every way…

A: Solution : If we invest in any security than we will firstly calculate the return on that investment…

Q: You can invest in a portfolio of two assets: the riskfree asset with rate of return 6%, and a risky…

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Q: The UIB company desires to construct a portfolio with 15% expected return. The portfolio is to…

A: Beta of portfolio indicates the systematic risk of the portfolio. Systematic risk is also known as…

Q: 8. Suppose security X achieves 20% return with half chance and -10% return with half chance. (a)…

A: The expected return is the return that an investor expects from its investment. Risk of an asset is…

Q: fill in the rest of the following table:

A: As the portfolio is to be as risky as the market, the beta of portfolio will be 1. As the risk free…

Q: The investor has R60,000 to invest. R15,000 will be invested into the market portfolio, R10,000 into…

A: Beta shows the risk related to overall market risk and it show that how stock is sensitive to the…

Q: the simple is valid and all portfolios are priced correct hich of the situations below is possible?…

A: Capital Asset Pricing Model:It is a financial model that estimates an investment's or asset's…

Q: Consider the single factor APT. Portfolio A has a beta of 1.5 and an expected return of 19%.…

A: The single factor APT assumes that the expected return of an asset is proportional to its beta,…

Q: The UIB company desires to construct a portfolio with 15% expected return. The portfolio is to…

A: The beta of a stock is the measure of the systematic risk associated with investing in the stock as…

Q: Which of the following portfolios should a risk averse investor choose? Portfolio Name σ(rP) Sharpe…

A: A risk averse investor looks to minimize risk and maximize the returns.Lower Standard deviation…

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: Given an optimal risky portfolio with expected return of 20%, standard deviation of 24%, and a risk…

A: Given information: Expected return is 20% Standard deviation is 24% Risk free rate is 7%

Q: Find the Expected Return on Market Portfolio given that the Expected Return on Stock Y is 0.156 and…

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Q: Which of the following investments does a rational investor prefer? a. Investment A: E(R) = 12%, σ…

A: Introduction: Usually, the expected return is the average return that is measured arithmetically…

Q: You compute the optimal risky portfolio to have the expected return of 12% and standard deviation of…

A: Here, Expected Return of Portfolio  is 12% Standard Deviation is 20% Risk-free rate is 4% Risk…

Q: An Investor has access to a set of N securities (where N is large). Each of them has an annual…

A: A group of financial assets such as stocks, bonds, commodities, cash, and cash equivalents, as well…

Q: 3. How risky is your portfolio if you have invested 50% to security 1 and 50% to security 2? What if…

A: We need to compute the standard deviation of 2 portfolios. Portfolio 1 = 50% in Security 1 and 50%…

Q: You want to create a portfolio equally as risky as the market, and you have $1,500,000 to invest.…

A: Total investment=$15,00,000Investment in A=$3,00,000Investment in B=$22,5000

Q: Beta Volatility SFT 0.45 20% rd -E egle 0.75 18% 1.05 35% 25% 1.20 m has the most total risk? SE…

A: Risk is Measured by Beta of stock and more Beta the stock is more risky.

Q: security A and B is 0.25. The risk free rate is 3%. The weight of security A in the tangency…

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Q: An investor has $1000 initial wealth for another $500 at the risk free rate. He then invest the…

A: Borrowings are the negative wealth.The portfolio consists of $1500 investment in market portfolio…

Q: The risk-free rate and the expected market return are 5% and 12%, respectively. According to the…

A: The model that explains the association between expected return and systematic risk is called the…

Q: •A portfolio consisting of five securities could have its beta factor computed as follows: •If the…

A: Given, Risk-Free Rate (Rf)    = 12% Average Market Return (Rm) = 20% To calculate the required…

Q: You invest $600 in security A with a beta of 1.2 and $400 in security B with a beta of 0.90. The…

A: Beta: It is the systematic risk of security or bunch of securities (portfolio) as compared to the…

Q: You are given the following information concerning three portfolios, the market portfolio, and the…

A: PortfolioRpσpBpX12.00%29.00%1.25Y11.00%24.00%1.1Z8.00%14.00%0.75Market10.00%19.00%1Risk-free4.00%0.0…

Q: What would be the beta of this portfolio?

A: Beta shows the relation between systematic risk of the investment and the expected return of the…

Q: otal return= 10% with profitability 50% total return= 20% with…

A: The expected return is derived by dividing the number of possible outcomes (yields) by the…

Q: what is the slope of the best feasible CAL?

A: Sharpe ratio is the measure of risk with return adjusted on a portfolio. A higher portfolio is…

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

Q: Risky asset P (an index fund) and risk-free asset F (T-Bill), form a complete portfolio C using P…

A: Given:E(rP)=0.15σP=0.22rf=0.07A=4Calculate y∗: y* = E(rp) - rf / (4 * σp^2)= (15% - 7%) / (4 *…

Q: An optimal risk portfolio’s expected return is 14%, standard deviation is 22%. If risk-free rate is…

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Q: An investment banker has recommended a $100,000 portfolio containing assets B, D, and F. $30,000…

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Q: Risk tolerance (tk)ofShailendra is 50 .  He is considering investment in one of the following…

A: Average expected return and standard deviation of each portfolio is caluclated as below: Portfolio A…

Q: Security A has an expected rate of return of 22% and a beta of 2.5. Security B has a beta of 1.2. If…

A: The expected return is calculated using the CAPM formula as below: Expected Return = Riskfree rate +…

Q: The market portfolio has expected return of 12% and risk of 19%, and the risk-free rate is 5%.…

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Q: A portfolio manager creates the following portfolio: Security Security Weight Expected Standard…

A: Standard deviation of portfolio is dependent on the weight of each security in the in the portfolio…