Find the weights of the minimum-risk portfolio invested

Assignment Help Financial Management
Reference no: EM131016070

How to find the weights of the minimum-risk portfolio invested in AAPL-APPLE and SPDR GOLD SHARES-GLD. Period: January 01, 2015-Dec.31, 2015. Please show steps. Hint: the square of the risk of a portfolio with weight w in AAPL and weight 1 – w in GLD is a quadratic function of the form f (w)= aw2 +bw + c where a,b, c are numerical values to be computed.

Reference no: EM131016070

Questions Cloud

Using appropriate matrices, find the portfolio risk : A stock portfolio P is comprised of three stocks A,B,C. The expected returns for the securities are .05 for stock A, .08 for Stock B and .18 for Stock C. The variance of returns for Stock A is .01, .16 for Stock B and .25 for Stock C. The covariance ..
Sixplex apartment building and lives in one unit : Pedro owns a sixplex apartment building and lives in one unit. The building is insured under the Dwelling Property 1 (basic form) policy for $320,000. The replacement cost of the building is $400,000. Explain to what extent, if any, Pedro will recove..
Decision is based solely on the time value of money : Suppose in August of 2015 a high school senior is offered on of the following two tuition vouchers: A voucher that pays $2000 for the upcoming academic year (2015) A voucher that pays $3000 2 academic years in the future (2017) Assume that the studen..
Find the weights of the minimum-risk portfolio invested : How to find the weights of the minimum-risk portfolio invested in AAPL-APPLE and SPDR GOLD SHARES-GLD. Period: January 01, 2015-Dec.31, 2015. Please show steps. Hint: the square of the risk of a portfolio with weight w in AAPL and weight 1 – w in GLD..
What is the arbitrage price of bond : Assume that there are two three-year bonds with face values equaling $1000. The coupon rate of bond A is .05 and .08 for bond B. A third bond C also exists, with a maturity of two years. Bond C has a face value of $1000; it has a coupon rate of 11%. ..
Find the minimum-risk portfolio : A stock portfolio P is comprised of three stocks A,B,C. The expected returns for the securities are .05 for stock A, .08 for Stock B and .18 for Stock C. The variance of returns for Stock A is .01, .16 for Stock B and .25 for Stock C.  FIND THE MINIM..
What is before tax cost of debt for olympic : Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face value of $29 million, a maturity of 10 years, and a yield to maturity of 10%. The coupons are paid annually.  What is before tax cost of debt for Olympic?
Start saving for retirement beginning next year : Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $63,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next yea..

Reviews

Write a Review

Financial Management Questions & Answers

  What will be the flotation-adjusted cost of equity

Suppose that Brown-Murphies’ common shares sell for $24.50 per share, that the firm is expected to set their next annual dividend at $0.77 per share, and that all future dividends are expected to grow by 5 percent per year, indefinitely. Assume Brown..

  Estimate your exposure to the exchange risk

Suppose that you hold a piece of land in the city of London that you may want to sell in one year. Estimate your exposure to the exchange risk

  Properly constructed cross hedge is established

MacDonald's Hamburger Company wants to hedge its anticipated purchase of 1,600,000 pounds of hamburger with the live cattle futures contract (40,000 lb. of live cattle per futures contract). The estimated relationship between the price that MacDonald..

  A major weakness with the payback method

A major weakness with the payback method is it failure to

  Using the marginal tax rates from your book

Kyle has been asked to serve as a consultant on a building project and can get paid his fee up-front or at the end of the long project. He has agreed to do the consulting work for a fee of $20,000. Using the Marginal Tax Rates from your book (pp. 106..

  What loan-to-value ratio

What loan-to-value ratio (M) is implied for the following property if the debt coverage ratio (DCR) is 1.15?

  Ratio that liquidity-solvency and profitability

When reviewing the financial statements of a company, there are many different ratios to choose from. Choose a ratio that looks at liquidity, solvency and profitability and discuss its importance.

  Different basic interest rate swap and futures positions

Suppose that you buy an interest rate cap on three month LIBOR with a two year maturity and simultaneously sell a floor on three month LIBOR with a two year maturity. Ignore the premiums. Draw a profit diagram that indicates when you will gain and lo..

  Shares of stock outstanding-what is the price-earnings ratio

Mining Materials, Inc. has a market-to-book ratio of 1.6, net income of $180,000, a book value per share of $52.50, and 120,000 shares of stock outstanding. What is the price-earnings ratio?

  Stock exceed the required return on the less risky stock

Required rate of return Stock R has a beta of 1.3, Stock S has a beta of 0.6, the expected rate of return on an average stock is 12%, and the risk-free rate of return is 7%. By how much does the required return on the riskier stock exceed the require..

  Calculate the effective annual rate

Bright star bank pays a nominal annual interest rate of 11.36 percent compounded quarterly on your savings account. Calculate the effective annual rate or EAR (answer plus units) round 2 decimal places

  Maximum price you should be willing to pay for the bond

Assume that you are considering the purchase of a 20-year, non callable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 8.4% nominal yield to maturity on this..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd