Determine beta and the expected return on proposed portfolio

Assignment Help Financial Management

Reference no: EM131338769

An investor currently has all of his wealth in Treasury bills. He is considering investing one-third of his funds in General Electric, whose beta is 1.30, with the remainder left in Treasury bills.

The expected risk-free rate (Treasury bills) is 6 percent and the market risk premium is 8.8 percent. Determine the beta and the expected return on the proposed portfolio.

Reference no: EM131338769

Questions Cloud

Balance sheet extract relates to the company : The following balance sheet extract relates to the ABC Company. The company’s common shares which have a book value of $25 per share are currently selling at $28 per share. The beta on the company’s stock is 0.7

Bond prices and interest rates move : After you have studied Economics in the News on pp. 174-175, answer the following questions. A. Why does the news article say that bond prices and interest rates move in opposite directions? Is it correct? Explain.

Spot rate between us and japanese yen : Find out the cross rate between US$ and British Pound Sterling(£) if the spot rate between British Pound Sterling and Japanese Yen(¥) is ¥121/£ and the spot rate between US$ and Japanese Yen is ¥85/$.

Government budget deficit influence the loanable funds : How does a government budget deficit influence the loanable funds market and why does a decrease in the deficit lower the real interest rate?

Determine beta and the expected return on proposed portfolio : The expected risk-free rate (Treasury bills) is 6 percent and the market risk premium is 8.8 percent. Determine the beta and the expected return on the proposed portfolio.

Calculate the holding period return on a before-tax basis : Mary and Nick Stalcheck have an investment portfolio containing 4 vehicles. It was developed to provide them with a balance between current income and capital appreciation. Calculate the holding period return on a before-tax basis for each of these f..

Does the keeper have to sound the horn : If they are less than 300 feet, she plans to sound the horn. How far apart are these vessels? Does the keeper have to sound the horn?

Compute the expected return from the portfolio : You are considering investing in two securities, X and Y. - Compute the expected return from the portfolio and The standard deviation of returns from the portfolio.

Difference between mediation and arbitration : This assignment has two parts. The first is to explain in your own words the difference between mediation and arbitration in the context of conflict resolution - giving a real world example of each. The second is to explain in your own words why..

User Account

All Pages