User Account

All Pages

Create a portfolio consisting of shares

Assignment Help Financial Management
Reference no: EM131058100

Suppose the risk-free interest rate is 4% and the market portfolio has an expected return of 10% and a volatility of 16%. Star plc stock has a 30% volatility and a correlation with the market of 0.6. You want to create a portfolio consisting of shares in Star plc plus a risk-free asset. You would like this portfolio to have the same beta as the market. What proportion of your money should you invest in each asset?

Reference no: EM131058100

Questions Cloud

What are the goals of managerial accounting : How have the terms minority and majority evolved during your lifetime? How is this supported or negated through your reading of this week's American minority writers? Please share your impressions from the reading, include a quote, and, perhaps, a..
Themes and patterns about civil disobedience : read two articles: Search for common themes and patterns about civil disobedience. Do you think that civil disobedience is a valid way to change in society? Defend your position. Need to cite two articles.
Show that every 3nf schema is in 2nf : Show that every 3NF schema is in 2NF. (Hint: Show that every partial dependency is a transitive dependency.)
Explain informally the working of the machine m : Explain informally, the working of the machine M. Give the language L(M ) in set notation. Provide a grammar having 12 or less rules that accepts the same language as M. What type of grammar is it
Create a portfolio consisting of shares : You want to create a portfolio consisting of shares in Star plc plus a risk-free asset. You would like this portfolio to have the same beta as the market. What proportion of your money should you invest in each asset?
Critically explain the three forms of restructure : Comment on restructure and competitive performance issues, in relation to this area of the theory - development and application of skills and expertise individually enabling constructive engagement with challenges of restructure, its advantages and..
Find the arbitrage-free price of the call option : The one-period risk-free rate at which investors can borrow and lend is 5% per year. A European call option on this stock that expires in one year has an exercise price of £22. (i) Use the single period binomial option pricing model to find the arb..
Extension of the spring due to suspended weight : 1. A weight of 50 N is suspended from a spring of stiffness 5000 N/m and is subjected to a harmonic force of amplitude 40 N and frequency 4 Hz. Find: (a) The extension of the spring due to suspended weight.
Ideals in bringing peace back to the roman empire : In four pages double-spaced, Times New Roman, Font size 12: What are four major accomplishments of Augustus during his time as ruler that support his ideals in bringing peace back to the Roman Empire?

Reviews

Write a Review

Financial Management Questions & Answers

  About the replicating portfolios

Replicating portfolios: Stock ABC is currently trading at $20. There is a 60% real-world probability that six months in the future the price will go up to $23. There is a 40% real-world probability that six months in the future the price will go down..

  Calculate the net present value for investments d and e

Calculate the net present value for Investments D and E. Use the equivalent annual annuity method to solve this problem. How does your answer compare with the one obtained in part b?

  Why financial institutions are highly regulated

Why financial institutions are highly regulated in all countries?

  How you could make an arbitrage profit

You are working as a corporate treasurer and observe the following two exchange rates. Calculate, using $1 million how you could make an arbitrage (risk-free) profit.

  What is the estimated price of equity on per share basis

The firm just paid dividend $2.5 per share. Dividend will grow ten percent for three years. After that they are expected to be constant forever (exact same amount at year 3 dividend)  use discounted cash flow model-what is estimated price of equity o..

  Calculate the times burden covered ratio

Calculate the times interest earned ratio for next year assuming the firm raises $40 million of new debt at an interest rate of %6  Calculate the times burden covered ratio for next year assuming annual sinking fund payments on the new debt will equa..

  Calculate accumulated depreciation

Genetic Insights Co. purchases an asset for $19,193. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, r..

  What is the expected return and standard deviation

What is the expected return and Standard Deviation of a $10,000 portfolio in which you expect to 5% return and a standard deviation of 20%? Assume 1% risk free rate.

  The cost of capital for a project depends

The cost of capital for a project depends on A.

  Evaluate the importance of financing and technology

Summarize key milestones involved in the past and present shaping and transitional dynamics behind changes in the present health care industry.

  Find the optimal capacity of the unit train

Dulles Electric Company buys 1 million tons of coal annually to burn at its power plant. The company wants to invest in a unit train that will haul coal from the mine to the power house, where it is dumped in a large field. Find the optimal capacity ..

  What is effective interest rate being paid

A friend purchased a new sound system that was selling for $4,200. He agreed to make a down payment of $1,000 and to make 24 monthly payments of $160, beginning one month from the time of purchase. What is the effective interest rate being paid?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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