You want to invest $44,000 in a portfolio with a beta of no more than 1.4 and an expected return of 13.8%. Bay Corp. has a beta of 0.9 and an expected return of 10.3%, and City Inc. has a beta o 1.7 and an expected return of 15.9%. The risk-free rate is 4%. Is it possible to create this portfolio investing in Bay Corp, and City Inc.? If so, how much will you invest in each? Select the correct choice and, if necessary, fill in the answer boxes to complete your choice. OA. It is possible to create the portfolio by investing in Bay Corp. and Sin City Inc. (Round to the nearest cent) B. It is not possible to create the portfolio

You want to invest $44,000 in a portfolio with a beta of no more than 1.4 and an expected return of 13.8%. Bay Corp. has a beta of 0.9 and an expected return of 10.3%, and City Inc. has a beta o 1.7 and an expected return of 15.9%. The risk-free rate is 4%. Is it possible to create this portfolio investing in Bay Corp, and City Inc.? If so, how much will you invest in each? Select the correct choice and, if necessary, fill in the answer boxes to complete your choice. OA. It is possible to create the portfolio by investing in Bay Corp. and Sin City Inc. (Round to the nearest cent) B. It is not possible to create the 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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Suppose that you currently have $100,000 invested in a portfolio with an expected return of 13% and a volatility of 8%. The efficient (tangent) portfolio has an expected return of 17% and a volatility of 10%. The risk-free rate of interest is 1%. Suppose that you want to keep the expected return equal to the current rate of 13%. Accordingly, the level of risk you can expect is: 1.00% 3.75% 4.75% 5.15% None of the above
Kk.177.
Give typing answer with explanation and conclusion
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).
You manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 30%. The T-bill rate is 2%. Your client chooses to invest 65% of a portfolio in your fund and 35% in a T-bill money market fund. What is the reward-to-volatility (Sharpe) ratio (S) of your risky portfolio? Your client's? Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Your reward-to-volatility (Sharpe) ratio Client's reward-to-volatility (Sharpe) ratio
I want the solution with Excel
Consider the single factor APT. Portfolio A has a beta of 1.5 and an expected return of 20 %. Portfolio B has a beta of 0.7 and an expected return of 16%. The risk - free rate of return is 8%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio and a long position in portfolio
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 __________.
If you create a portfolio for your client with 73 percent invested in the S&P 500 U.S. stock index (which includes T) and the remaining 27 percent in the Vanguard Gold index. The expected return is 30 percent for the S&P 500 and 3 percent for the Vanguard Gold index. The risk is 7.5 percent for the S&P 500 and 5 percent for the Vanguard Gold index. Estimate the portfolio’s return and risk given that the correlation coefficient between the S&P 500 and the Vanguard Gold index is -0.3? (e) Evaluate the effect of a change in the correlation coefficient to 0.8 on the portfolio’s return and risk.
(b) Build a spreadsheet model and solve the problem using Solver. What is the recommended investment portfolio for this client? Internet Fund = $ Blue Chip Fund = $ What is the annual return for the portfolio? (c) Suppose that a second client with $50,000 to invest has been classified as an aggressive investor. B&R recommends that the maximum portfolio risk rating for an aggressive investor is 340. What is the recommended investment portfolio for this aggressive investor? Internet Fund = $ Blue Chip Fund = $ Annual Return = $ (d) Suppose that a third client with $50,000 to invest has been classified as a conservative investor. B&R recommends that the maximum portfolio risk rating for a conservative investor is 150. Develop the recommended investment portfolio for the conservative investor. If an amount is zero, enter "0". Internet Fund = $ Blue Chip Fund = $ Annual Return = $
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?
An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 17% and a standard deviation of return of 28%. Stock B has an expected return of 15% and a standard deviation of return of 15%. The correlation coefficient between the returns of A and B is 0.8. The risk-free rate of return is 3.2%. What is the expected return on the optimal risky portfolio? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

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