You manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 32%. The T-bill rate is 3%. Stock A Stock B Stock C 27% 36% 37% Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfo will have an expected rate of return of 9%. 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?
You manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 32%. The T-bill rate is 3%. Stock A Stock B Stock C 27% 36% 37% Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfo will have an expected rate of return of 9%. 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?
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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