Your portfolio has three asset classes. U.S. government T-bills account for 49% of the portfolio, large-company stocks constitute another 35%, and small-company stocks make up the remaining 16%. If the expected returns are 3.53% for the T-bills, 11.24% for the large-company stocks, and 16.47% for the small-company stocks, what is the expected return of the portfolio? The expected return of the portfolio is %. (Round to two decimal places.)

Your portfolio has three asset classes. U.S. government T-bills account for 49% of the portfolio, large-company stocks constitute another 35%, and small-company stocks make up the remaining 16%. If the expected returns are 3.53% for the T-bills, 11.24% for the large-company stocks, and 16.47% for the small-company stocks, what is the expected return of the portfolio? The expected return of the portfolio is %. (Round to two decimal places.)

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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Your portfolio has three asset classes. U. S government T bills account for 47% of the portfolio, large company stocks constitute another 33%, and small company stocks make up the remaining 20%. If teh expected returns are 2.41% for the T-bills, 11.41% for the large company stocks, and 17.15% for the small company stocks, what is the expected return on the portfolio?
You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stock B. If the beta of the stock A is 0.87 and the beta of the portfolio is 0.92, what does the beta of stock B have to be?
(Capital Asset Pricing Model) The expected return for the general market is 13.0 percent, and the risk premium in the market is 9.3 percent. Tasaco, LBM, and Exxos have betas of 0.895, 0.602, and 0.518, respectively. What are the appropriate expected rates of return for the three securities? The appropriate expected return of Tasaco is%. (Round to two decimal places.)
(Capital Asset Pricing Model) The expected return for the general market is 13.0 percent, and the risk premium in the market is 9.5 percent. Tasaco, LBM, and Exxos have betas of 0.842, 0.689, and 0.547, respectively. What are the appropriate expected rates of return for the three securities? The appropriate expected return of Tasaco is %. (Round to two decimal places.) The appropriate expected return of LBM is%. (Round to two decimal places.) The appropriate expected return of Exxos is%. (Round to two decimal places.) 2 *** W S X ommand # m 3 SO P3 E D $ 4 C 990 GOD F4 R F % es 5 V FS T G 6 MacBook Air B F6 Y Question Viewer & 8 r 7 H ( 44 F7 U N * 8 J D-11 FR M ( 9 K MOSISO 19 O 1 command : . ; 4 + I = " ? option 40 VYZ { J DI ( Next . 1 "A and Me dele re
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A portfolio consists of assets with the following expected returns (refer to image): a. What is the expected return on the portfolio if the investor spends an equal amount on each asset? b. What is the expected return on the portfolio if the investor puts 50 percent of available funds in technology stocks, 10 percent in pharmaceutical stocks, 24 percent in utility stocks, and 16 percent in the savings account?
You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stack the beta of the stock A is 1.38 and the beta of the is 0.98 what does the beta of stock B have to be?
A portfolio has a value P(E, S), so that the value P is a function of E, the price of a Euro in Canadian dollars, and S, the level of the TSX stock index. Presently the portfolio is worth $364,000, while a Euro is $1.50 Canadian, and the index is S = 18,000. If the partial derivatives of P have values ∂P ∂E = 68,000, and ∂P ∂S = −27, what approximately will the portfolio value be if the price of a Euro goes down by 0.04 and the stock index goes down by 413?
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.
Consider two types of assets: market portfolio (M) and stock A. The expected return is 8% and standard deviation of the market portfolio is 15%. The risk-free rate is 2%. The standard deviation of market portfolio returns is 15%. The standard deviation of stock A is 30%, and the beta coefficient is 1. Draw the capital market line and show the position of stock A.
(Capital asset pricing model) Grace Corporation is considering the following investments. The current rate on Treasury bills is 2.5 percent and the expected return for the market is 9 percent. Stock Beta K 1.06 G 1.28 B 0.78 U 0.93 (Click on the icon in order to copy its contents into a spreadsheet.) a. Using the CAPM, what rates of return should Grace require for each individual security? b. How would your evaluation of the expected rates of return for Grace change if the risk-free rate were to rise to 4 percent and the market risk premium were to be only 6 percent? c. Which market risk premium scenario (from part a or b) best fits a recessionary environment? A period of economic expansion? Explain your response. Question content area bottom Part 1 a. The expected rate of return for security K, which has a beta of 1.06, is enter your response here%. (Round to two decimal places.) Part 2 The expected rate…
Investment Management Inc. (IMI) uses the capital market line to make asset allocation recommendations. IMI derives the following forecasts:∙ Expected return on the market portfolio: 12%. ∙ Standard deviation on the market portfolio: 20%∙ Risk-free rate: 5%Samuel Johnson seeks IMI’s advice for a portfolio asset allocation. Johnson informs IMI that he wants the standard deviation of the portfolio to equal half of the standard deviation for the market portfolio. Using the capital market line, what expected return can IMI provide subject to Johnson’s risk constraint?

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