What is expected return on portfolio that equally invested

Assignment Help Financial Management
Reference no: EM13882031

A stock has a beta of 1.15 and an expected return of 13 percent. A risk-free asset currently earns 2.8 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return % b. If a portfolio of the two assets has a beta of .92, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places, e.g., 32.1616.) Weight of stock Risk-free weight c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.) Beta d. If a portfolio of the two assets has a beta of 2.30, what are the portfolio weights? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers as a whole number.) Weight of stock Risk-free weight

Reference no: EM13882031

Questions Cloud

Beta of equity and beta of assets : Big Bass Sound (BBS) is a thriving music business. You would like to understand the market risk of BBS and are looking to find its Beta of the Assets. BBS' Beta of Equity is 3, the beta of debt is 0.3, and the tax rate is 32%. BBS has 169 in debt out..
An investment project has annual cash inflows : An investment project has annual cash inflows of $3,800, $4,700, $5,900, and $5,100, for the next four years, respectively. The discount rate is 14 percent. What is the discounted payback period for these cash flows if the initial cost is $8,600?
About the beta of assets : Katy's Kitten Emporium (KKE) is a thriving pet store business. You would like to understand the market risk of the KKE and are looking to find its Beta of the Assets. KKE's Beta of Equity is 1.7, the beta of debt is 0.2, and the tax rate is 29%. If K..
Determine which copier the company should acquire : The company uses a 3-year planning period and a MARR of 15% per year. Determine which copier the company should acquire on the basis of an incremental rate of return analysis.
What is expected return on portfolio that equally invested : A stock has a beta of 1.15 and an expected return of 13 percent. A risk-free asset currently earns 2.8 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has a beta of ...
What specific risks does each supplier option present : What issues should Magness evaluate in his assessment of transportation risks? Analyze each supplier option that Magness is considering. What specific risks does each supplier option present
Considering investing in chos chocolate confectionary : You are considering investing in Cho's Chocolate Confectionary (CCC). CCC's stock price last month was 62.81, CCC's stock price this month was 55.93. As well, CCC paid a dividend of 5.02. After the dividend was paid but before the end of the month, C..
Determine which alternative is best using incremental rate : Assume a life of 20 years and a MARR of 10% per year to determine which alternative is best using an incremental rate of return analysis.
Describe basic hie organizational structures : Discuss the impetus for health information exchange in the United States and describe basic HIE organizational structures, architectures, and services.

Reviews

Write a Review

 

Financial Management Questions & Answers

  What is the firms pv of the interest tax shields

If a firm has $7.4 million in debt, $22.4 million in equity, a tax rate of 34%, and pays interest on debt, what is the firm's PV of the interest tax shields?

  Measure for an asset held in a diversified portfolio

Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?

  Dividend reinvestment plan

Pam owns 50 shares of Floor Mart Inc. The firm has a semi annual dividend policy of $0.75 per share or the option to reinvest the cash dividends into additional shares of company stock. If the stock is selling for $25.00 per share ex-dividend, how ma..

  What is the APR and EAR on this loan

You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 30-year mortgage loan for 80 percent of the $3,400,000 purchase price. The monthly payment on this loan will be $17,500. What is the APR and EAR on this loan?

  Approximate after-tax cost of debt for a new issue of bonds

The coupon rate on an issue of debt is 12%. The yield to maturity on this issue is 14%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds? The coupon rate on a debt issue is 12%. If the yield..

  What is the total rate of return on the bond

Consider a bond paying a coupon rate of 8.75% per year semiannually when the market interest rate is only 3.5% per half-year. The bond has three years until maturity. Find the bond's price today and six months from now after the next coupon is paid. ..

  How much interest would you pay over the life of the loan

You and your spouse are planning on buying a $200,000 house. Your bank is willing to give you a 30 year mortgage loan at 6.12%APR with monthly repayments. How much interest would you pay over the life of the loan?

  Operating expense or a capital expenditure

Determine if each of the following would be an operating expense or a capital expenditure.

  Increases the probability that a bond will be called

Which one of the following increases the probability that a bond will be called?

  What is the amount of each annuity payment

Uptown Insurance offers an annuity due with semi-annual payments for 25 years at 6 percent interest. The annuity costs $200,000 today. What is the amount of each annuity payment?

  What rate of return must the firm pay to attract investors

Consider the following: A firm’s operations are 45% GREATER than an average firm in the market. Relevant government securities trade 3.7%; and the current average return on the market as a whole is 9.1%. What rate of return must the firm pay to attra..

  In 1895 the first us open golf championship was held the

in 1895 the first u.s. open golf championship was held. the winners prize money was 150. in 2006 the winners check was

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