You want your portfolio beta to be 1.30. Currently, your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.8 and a risk-free asset. How much should you invest in the risk-free asset?

Q: Required: a) Calculate the expected return on this portfolio. b) What is the Beta of this portfolio?…

A: In finance a portfolio is a collection of different financial assets and securities like stocks,…

Q: Given the current risk-free rate is 9% and the market return is 12%. Investment Beta A 0.65 1.12…

A: The required rate of return represents the minimum return investors willing to accept for the given…

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: what must the beta be for the other stock in your portfolio?

A: The beta of a portfolio helps measure the portfolio's systematic risk. The portfolio beta is…

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

A: The question is based on the basis of calculation for risk aversion in the Indian system. The risk…

Q: Now assume that your portfolio only includes a risky asset, Asset C and a risk-free asset, Asset D.…

A: Here,Weight Alloted to Risky Asset Asset C is 30%Exoected Return to Risk Free Asset Asset D 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: You have just invested in a portfolio of three stocks. The amount of money that you invested in each…

A: As per Capital Assets Pricing Model the expected return is calculated with the help of following…

Q: Return on a portfolio may be roughly categorized into three levels: high, medium, and low. If the…

A: The expected return is the gain or loss that an investor can anticipate on an investment made. It is…

Q: (Portfolio beta and CAPM) You are putting together a portfolio made up of four different stocks.…

A: A portfolio is an assortment of securities—cash, stocks, bonds, and other investments—that an…

Q: What is the required return on an investment with a beta of 1.4 if the risk-free rate is 2.2 percent…

A: Capital Asset Pricing Model (CAPM) equation is used to determine the required return on an…

Q: Suppose that a portfolio consist of three securities: A, B and C with expected rates of return of…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

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: After learning the course, you divide your portfolio into three equal parts (i.e., equal market…

A: Here,Beta of Market Index is always 1Since Treasury bills are risk free, Beta is 0Beta of Mutual…

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

A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa) + (Bb*Wb)+(Bc*Wc)+(Br*Wr)whereBp =beta of…

Q: answer must be correct or i will give down vote

A: In finance, Beta is a measure of the risk arising from exposure to general market movements as…

Q: The risk-free rate is 4%, and the required return on the market is 12%. b. A portfolio invests 40%…

A: Portfolio return is the weighted average return of individual assets   Portfolio return = (WeightA *…

Q: An investor can design a risky portfolio based on two stocks, X and Y. Stock X has an expected…

A: Given information:Expected return of stock X (Ex) = 13%Expected return of stock Y(Ey) = 16%Risk-free…

Q: You are going to invest $20,000 in a portfolio consisting of assets X, Y, and Z, as follows: Asset…

A: Beta of portfolio is the weighted sum of the beta of all the assets in which investment was done.…

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: You are considering adding Gamma stock to your portfolio. What is the required return on the stock…

A: Required return: It is the return that is accepted by an investor for holding a stock of a…

Q: Assume you have an optimal risky portfolio with an expected return of 17% and a standard deviation…

A: Expected return (Re) = 17% Risk free rate (Rf) = 5% Risk aversion measure (A) = 2 Standard deviation…

Q: You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a…

A: The beta for the other stock is 1.59. Solution is provided in the explanation section. Hope this…

Q: You are evaluating various investment opportunities currently available and you have the fol- lowing…

A: Sharpe ratio refers to the measure of the performance of a portfolio based on its return after it…

Q: There is a riskless asset with a return of 0.026, and a risky asset with an expected return of 0.240…

A: Portfolio theory, often referred to as Modern Portfolio Theory (MPT), is a framework for…

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

A: weight of A= 144000/500000= 0.288weight of B= 136000/500000 = 0.272

Q: Suppose you have a portfolio of Vestel and Turkcell with a beta of 1.8 and 0.9, respectively. If you…

A: The Answer states the computation of Portfolio Beta by taking the weighted average of individual…

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: Fenway Athletic Club plans to offer its members preferred stock with a par value of $100 and an…

A: Preferred stock are stock which provides the holder with fixed dividend and have the priority over…

Q: You are considering buying some share in The Wayne Coporation as part of your retirement account.…

A: Solution:-Capital Asset Pricing Model (CAPM) is a model which gives a formula to calculate the…

Q: V3. By looking at the sensivities of your portfolio to δs = -$2 and δσ = -1%, you decide to hedge…

A: The degree of uncertainty and/or potential financial loss associated with an investment choice are…

Q: n investor has an opportunity to invest in two risky assets and a risk-free asset. The expected…

A: Such a portfolio is constructed using 'Solver' of excel. It is found under 'Data' tab.

Q: You own a portfolio equally invested in a risk-free asset and two stocks (If one of the stocks has a…

A: Information Provided: Beta of one stock = 0.91 Beta of risk-free asset = 0 Beta of total portfolio…

Q: You want to create a portfolio equally as risky as the market, and you have $5M to invest. Given the…

A: Calculate the weight of the risk-free asset:We know the weights of stock A and B since their…

Q: You can invest in a portfolio of two assets: the riskfree asset with rate of return 10%, and a risky…

A: Risk free rate(rf) is 10% Expected return(Er) of 14% Standard deviation is 35%   To Find: Utility…

Q: You already have a portfolio with a delta of 8500 (portf-8500) and a gamma of 500 (portf=500).…

A: Gamma measures the rate of change of an option's delta with respect to changes in the underlying…

Q: You still have $14,000 invested in TGT and $8,000 invested in JCP. If the beta of TGT is 0.65 and…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

Q: After learning the course, you divide your portfolio into three equal parts (i.e., equal market…

A: Here, Beta of Market Index is always 1 Beta of Treasury Bills is always 0 Beta of Mutual Fund is 0.8…