Combines the risk-free asset and the market portfolio

Assignment Help Financial Management

Reference no: EM131072284

A portfolio that combines the risk-free asset and the market portfolio has an expected return of 6.3 percent and a standard deviation of 9.3 percent. The risk-free rate is 3.3 percent, and the expected return on the market portfolio is 11.3 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .38 correlation with the market portfolio and a standard deviation of 54.3 percent?

Reference no: EM131072284

Questions Cloud

Review algorithm identify inaccuracies and insert correction : Review the below algorithm, identify the inaccuracies, and insert the corrections: Modify the following algorithm to include the repetition structure. Review the algorithm, identify the inaccuracies, insert the corrections, save the document, and ..

Dividends and dividend policy : Essentials of Corporate Finance (8th Ed.): Dividends & Dividend Policy. Paul Inc. announced a $1.50 per share dividend with an ex-date of May 15. If the closing price of Paul's stock was $35 on May 14, what would we expect the price to be on the clos..

What is the expected return on portfolio : Suppose the risk-free rate is 3.5 percent and the market portfolio has an expected return of 10.2 percent. The market portfolio has a variance of .0312. Portfolio Z has a correlation coefficient with the market of .21 and a variance of .3215 Accordin..

Plot the reaction functions to scale on a graph : Plot the reaction functions to scale on a graph.

Combines the risk-free asset and the market portfolio : A portfolio that combines the risk-free asset and the market portfolio has an expected return of 6.3 percent and a standard deviation of 9.3 percent. The risk-free rate is 3.3 percent, and the expected return on the market portfolio is 11.3 percent. ..

What will your monthly mortgage be : You have found a house you would like to purchase. THe house costs $169,000 and you have $12,000 cash to pay as a down payment. Your bank will loan you the balance at 6.25 percent interest for 30 years. What will your monthly mortgage be?

The supply chain between able plant and baker plant : What information would be lost if two models were used instead of the one model in this chapter? One model would represent the supply chain between Able plant and Baker plant and the other between Able plant and Chauncey plant.

What will be the effect on profit of accepting the order : PowerDrive, Inc. produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was: At the start of the current year, the company received an order for 3,400 drives from a computer company in China. Ma..

Using current specifications-resurfacing a road will cost : Using the current specifications, resurfacing a road will cost $1.5M initially, need $120K in annual maintenance, and need to be resurfaced every 10 years. The resurfacing cost will be $2.1M with $90K in annual maintenance and resurfacing every 15 ye..

User Account

All Pages