What is the beta of asset

Assignment Help Financial Management
Reference no: EM131448294

The returns on asset X and the market portfolio M are related as: RX = 0.01 + 0.8Rm + 0.2? where ? is a standard normal variable and uncorrelated with Rm. The expected return on the market portfolio is 15% with a standard deviation of 20%.

A) What is the beta of asset X?

B) Construct the minimum variance portfolio using Rx and Rm

C) Using Rx and Rm, construct the mean-variance efficient portfolio with a target return of 16%. Do you need to have a short position in asset X and/or the market portfolio? what is the risk of the portfolio?

D) Assume there is a risk-free asset and CAPM hold. What is the risk free rate? Is asset X mean-variance efficient? If not, can you find a mean-variance efficient portfolio that has the same expected return as asset X with less risk?

Reference no: EM131448294

What is the percentage change in the price of bonds

Both Bond Bill and Bond Ted have 10.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to maturity, whereas Bond Ted has 21 years

Assume that libor is used as the risk-free discount rate

Suppose that the 3 month and 6 month continuously compounded LIBOR rates are 3% and 3.5% respectively. Assume that LIBOR is used as the risk-free discount rate. What is the va

Accounts-amounts would be debited or credited on worksheet

Road Corporation acquired all of Conger Corporation's voting shares on January 1, 20X2, for $471,000. At that time Conger reported common stock outstanding of $85,000 and reta

What is the expected return on the portfolio

Company Z carries a portfolio consisting of two investments, A and B. Its portfolio mix is onethird for Investment A which has an expected return of 18 percent and two-thirds

Future value annuity

Future Value Annuity At the beginning of each period, you are planning to make annual deposits of $4,800 into a retirement account that pays 10 percent interest compounded mon

Based on an internal rate of return analysis

Quantum Logistics, Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the Alabama-Georgia borde

What will be approximate capital gain of bond

A bond has a par value of $1,000, a time to maturity of 15 years, and a coupon rate of 9.00% with interest paid annually. if the current market price is $900, What will be the

Evaluated projects using the firms average discount rate

A colleague has evaluated projects using the firm's average discount rate, which is the discount rate on the average risk project of the firm. He produced the following report

Reviews

Write a Review

 
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