Will adding the real estate fund improve your portfolio

Assignment Help Finance Basics
Reference no: EM131334014

Identifying the Efficient Portfolio

Consider the Omega Fund and real estate fund of Example 11.13. Suppose you have $100 million invested in the Omega Fund. In addition to this position, how much should you invest in the real estate fund to form an efficient portfolio of these two funds?

Example 11.13

You are currently invested in the Omega Fund, a broad-based fund with an expected return of 15% and a volatility of 20%, as well as in risk-free Treasuries paying 3%. Your broker suggests that you add a real estate fund to your portfolio. The real estate fund has an expected return of 9%, a volatility of 35%, and a correlation of 0.10 with the Omega Fund. Will adding the real estate fund improve your portfolio?

Reference no: EM131334014

Questions Cloud

Blood through the heart and differentiate between pulmonary : Trace the pathway of the blood through the heart and differentiate between pulmonary, systemic, and cardiac circulation.
What is the company''s wacc : Sixx AM Manufacturing has a target debt-equity ratio of 0.65. Its cost of equity is 15 percent, and its cost of debt is 10 percent. If the tax rate is 32 percent, what is the company's WACC?
What are two most common minerals located in earths crust : 007525RR- What are the two most common minerals located in Earth's crust? What measurement best describes the results of a scientific experiment regarding volume?
Will adding the real estate fund improve your portfolio : Consider the Omega Fund and real estate fund of Example 11.13. Suppose you have $100 million invested in the Omega Fund. In addition to this position, how much should you invest in the real estate fund to form an efficient portfolio of these two f..
What is amount of the annual sales revenue that is requied : In working on a bid project you have determined that $245,000 of fixed assets will be required and that they will be depreciated straight line to zero over the 5 year life of the project. After considering all of the project's cash flows you have det..
Growing algae in big tanks : A company is growing algae in big tanks to make fish food. However, the algae is not growing very quickly and thy suspect either phosphorus, nitrogen, or iron is limiting. What could the company of to figure out which nutrient is limiting?
Develop a time phased product structure : Develop a time phased product structure.- If 100 units of A are required in week 10 and 200 units in week 12 complete the gross requirement plan given below.
Next few years while the company undergoes restructuring : Barnett Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is ex..

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Formation of the portfolio and the rationale for selection

Write about three hundred words report on the formation of the portfolio and the rationale for the selection.

  Price the bonds from the above table with quarterly coupon

Price the bonds from the above table with quarterly coupon payments.

  The abc company had crime coverage in the amount of 5000

property and liabilityname1. the abc company had crime coverage in the amount of 5000. following a covered crime loss

  What are some comparative advantages of investing in the

what are some comparative advantages of investing in the followinga. unit investment trusts.b. open-end mutual funds.c.

  Initial public offering and the issue of additional shares

Explain in about 2 pages how an IPO differs from an issue of additional shares by a company with existing shares which already has a listing. Suggest why these differences lead to higher costs for IPOs. Explain what implications this has for firms..

  Compute your rate of return if you sell the bond next year

A 10-year, 7% coupon bond with a face value of $1,000 is currently selling for $871.65. Compute your rate of return if you sell the bond next year for $880.10.

  How the analysis considers how market performance affects

Describe how the analysis considers how market performance affects investor confidence, and vice versa. Do you believe that the market responds to rises and falls in investor confidence?

  Capital co has a capital structure based on current market

capital co. has a capital structure based on current market values that consists of 30 percent debt 3 percent preferred

  The project requires a 7000 working capital investment in

1. maritech purchased a pellet mill 4 years ago for 60000. the mill is being depreciated over 7years using macrs.

  Determine the expected number of new clients per month

At a computer-consulting firm, the number of new clients that they have obtained each month has ranged from 0 to 6. The number of new clients has the probability distribution that is shown below. Determine the expected number of new clients per m..

  What is the best estimate of the stocks post-split price

Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for $90 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-..

  A bank with deposits of 500 million has 75 million in cash

a bank with deposits of 500 million has 75 million in cash on hand 50 million in deposits with the fed and 80 million

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