Explain how much should you invest in the risk-free security

Assignment Help Business Economics
Reference no: EM1358986

You want to create a $75,000 portfolio comprised of two stocks plus a risk-free security. Stock A has an expected return of 13.6 percent and stock B has an expected return of 11.4 percent. You want to own $30,000 of stock B. The risk-free rate is 4 percent and the expected return on the market is 10 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest in the risk-free security?

Reference no: EM1358986

Questions Cloud

Explain the life cycle management process : Please describe the Life Cycle Management process - Explain the Life Cycle Management process
Preceding principles for probabilistic conditional : Which of the preceding principles are valid for this probabilistic conditional? Explain why or why not. Discuss the main difference that you found in your answers.
Explain how you filled out the form and any decisions : Explain how you filled out the form and any decisions you needed to make during the process
Anorexia or bulimia fundamentals : Give a comparison (similarities and differences) of either anorexia or bulimia, and one other eating disorder.
Explain how much should you invest in the risk-free security : If you want the portfolio to have an expected return equal to that of the market, explain how much should you invest in the risk-free security.
Bonus now or bonus deferment in 10 years : Under the terms of his salary agreement, president Juan Rivera has an option of receiving either an immediate bonus of $40,000, or a deferred bonus of $75,000 payable in 10 years.
Determine annual financing cost : Walters Manufacturing Corporation has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the company. The dealer indicates that Walters could sell a $5 million issue maturing in 182 days at an interest rate..
Illustrate what will gdp be equal to next year : Suppose that there is no growth in real GDP and inflation is equal to -2% per year. (Negative inflation is the same as deflation.) Measured in ducats, illustrate what will GDP be equal to next year.
Problem of adolescents delinquency : The problem of adolescents delinquency: How is it different from the problems of adolescents with anorexia nervosa?

Reviews

Write a Review

 

Business Economics Questions & Answers

  Hospital cost

A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to these numbers, what did the hospital cost approximately.

  Importance to use price index adjustments

How do the GDP per capita change after accounting for price indices. Why is it important to use price index adjustments.

  Nine slugs per hour

The law in Ruba says no worker shall be paid less than nine slugs per hour.

  Inflation protected securities

Explain how this new inflationary environment would affect the demand for money according to portfolio theories of money demand.

  Elucidate the marginal revenue from the fourth worker

Elucidate the marginal revenue from the fourth worker

  Set so that each resident shares the cost evenly

If the taxes are set so that each resident shares the cost evenly (a=b=c), how so many paths will get built.

  Explain why do us taxpayers lose

the congressional research service estimates that at least $45 million of counterfeit u.s. $100 notes produced by the north Korean government are in circulation. Explain why do U.S. taxpayers lose because of north Korea's counterfeiting.

  Elucidate why the firm short run production

Illustrate what management-financial considerations would required to be considered. Elucidate why the firm's short run production has only one ‘rational' stage of production.

  Discuss the probability that the annual net cash flows

Discuss the probability that the annual net cash flows will be negative. Determine the probability that the annual net cash flows will be less than $20,000.

  Word-processing program

Your paper should be written using a word-processing program, likely Microsoft Word otherwise a Word-compatible program.

  Yielded zero units of additional satisfaction

Assume you just finished your third plateful of Thanks giving dinner also it yielded zero units of additional satisfaction.

  What level of man-hours will maximize total output

illustrate the effect of capital formation by comparing the product posibility curves,at the present time and ten years in the future for two economies,one with a high and the other with a lowrate of capital formation.

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