You manage a risky portfolio with an expected rate of returnof 14% and a standard deviation of 35%. The T-bill rate is4%.Stock AStock BStock CSuppose that your client decides to invest in your portfolioa proportion y of the total investment budget so that theoverall portfolio will have an expected rate of return of 8%.33%36%31%Required:a. What is the proportion y?b. What are your client's investment proportions in yourthree stocks and the T-bill fund?c. What is the standard deviation of the rate of return onyour client's portfolio?Complete this question by entering your answers in theRequired AProportion yRequired BRequired CWhat is the proportion y?Note: Round your answer to the nearest whole number.%

Standard deviation refers to the measurement of the dispersion of data from its mean value which…

You manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 35%. The T-bill rate is 4%. Stock A Stock B Stock C 33% 36% 31% Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have a € 98/

You manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 35%. The T-bill rate is 4%. Stock A Stock B Stock C 33% 36% 31% Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have a € 98/

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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Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The T-bill rate is 7%. Your risky portfolio includes the following investments in the given proportions: Stock A Stock B Stock C 27% 33 40 Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill money market fund so that his overall portfolio will have an expected rate of return of 15%. Required: a. What is the proportion y? (Round your answer to 1 decimal place.) Proportion y 0.8 X %
Treasury bills are paying a 10% rate of return. A risk-averse investor with a risk aversion of A = 3 should invest entirely in a risky portfolio with a standard deviation of 27% only if the risky portfolio's expected return is at least ______. Multiple Choice 17.29% 10.62% 31.87% 11.87%
You manage a risky portfolio with an expected rate of return of 19% and a standard deviation of 32%. The T-bill rate is 7%. Your client chooses to invest 50% of a portfolio in your fund and 50% in a T-bill money market fund. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A Stock B Stock C 33 % 32 % 35 % What are the investment proportions of your client's overall portfolio, including the position in T-bills? (Round your answers to 1 decimal place.) T-Bills Stock A Stock B Stock C Investment Proportions % % % %
An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 15% and a standard deviation of return of 16.0%. Stock B has an expected return of 11% and a standard deviation of return of 4%. The correlation coefficient between the returns of A and B is 0.50. The risk-free rate of return is 7%. The proportion of the optimal risky portfolio that should be invested in stock A is __________.
You manage a risky portfolio with an expected rate of return of 10% and a standard deviation of 34%. The T-bill rate is 4%. Suppose that your client prefers to invest in your fund a proportion y that maximizes the expected return on the complete portfolio subject to the constraint that the complete portfolio's standard deviation will not exceed 10%. Required: a. What is the investment proportion, y? b. What is the expected rate of return on the complete portfolio?
You manage a risky portfolio with an expected rate of return of 10% and a standard deviation of 33%. The T-bill rate is 2%. Your client chooses to invest 75% of a portfolio in your fund and 25% in an essentially risk-free money market fund. What are the expected return and standard deviation of the rate of return on his portfolio? Note: Round your answers to 2 decimal places. Expected return Standard deviation % %
Assume you wish to hold a portfolio consisting of Loblaw stock and a riskless asset. Given the following information, calculate portfolio expected returns and portfolio betas, letting the proportion of funds invested in Loblaw range from 0 to 125% Loblaw has a beta (\ beta) of 1.2 and an expected return of 18% Risk-free rate is 7%. Loblaw weights: 0%, 25%, 50%, 75%, 100%
An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39 %. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%. The standard deviation of returns on the optimal risky portfolio is Multiple Choice 25.5% 22.3% 21.4% 20.7% O 11:18PM 20/200
You are a Morgan Stanley portfolio manager of a risky portfolio with an expected rate of return of 17% and a standard deviation of 28 %. The T - bill rate is 4%. Suppose your client decides to invest in your risky portfolio a proportion (y) of his total investment budget so that his overall portfolio will have a standard deviation of 10% . a. What is the proportion y?
You manage a risky portfolio with an expected rate of return of 13% and a standard deviation of 34%. The T-bill rate is 2%. Stock A Stock B Stock C 45% 32% 23% Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 11%. Required: a. What is the proportion y? b. What are your client's investment proportions in your three stocks and the T-bill fund? c. What is the standard deviation of the rate of return on your client's portfolio? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the proportion y? Note: Round your answer to the nearest whole number. Proportion y %
Nikul

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