User Account

All Pages

How much money will you invest in stock y

Assignment Help Finance Basics
Reference no: EM131126405

You have $100,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 13 percent and that has only 70 percent of the risk of the overall market. If X has an expected return of 31 percent and a beta of 1.8, Y has an expected return of 20 percent and a beta of 1.3, and the risk-free rate is 7 percent, how much money will you invest in Stock Y? How do you interpret your answer? 

Reference no: EM131126405

Questions Cloud

Decompose the stock return into the systematic return : The beta for a certain stock is 1.15, the risk-free rate is 5 percent, and the expected return on the market is 13 percent. Complete the following table to decompose the stock's return into the systematic return and the unsystematicreturn.
Which stock has the most systematic risk : The market risk premium is 8 percent, and the risk-free rate is 5 percent. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"?Explain.
How much money will you invest in stock y : If X has an expected return of 31 percent and a beta of 1.8, Y has an expected return of 20 percent and a beta of 1.3, and the risk-free rate is 7 percent, how much money will you invest in Stock Y? How do you interpret your answer?
Use this information to calculate the security beta : Fill in the following table, supplying all the missing information. Use this information to calculate the security'sbeta.
Calculate beta is to take the covariance : Show that another way to calculate beta is to take the covariance between the security and the market and divide by the variance of the market’s return.
What is the expected return on the market : Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-freerate?
If the risk-free rate is 6 percent and the market risk : Stock Y has a beta of 1.25 and an expected return of 14 percent. Stock Z has a beta of .70 and an expected return of 9 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, are these stocks correctly priced?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the net income annually for the plant

The depreciation of the plant is 50,000 per year. Assuming a corporate tax rate of 40%, what is the net income annually for the plant?

  You need to present to your client alice cartwright the

you need to present to your client alice cartwright the pros and cons of 3 different investments that are available to

  What dollar amount of deposits can the bank have

A new bank has vault cash of $1 million and $5 million in deposits held at its federal reserve district bank. If the required reserves ratio is 8 percent, what dollar amount of deposits can the bank have?

  What is the value of the option at least

If the current situation exist with: Best Case NPV $600 with a Probability of .5, Worst Case NPV -$1,000 with a Probability of .2, and a Likely Case of NPV $300 with a Probability of .3 an abandonment option that could change the Worst case NPV to..

  What will be your net profit or loss

What will be your net profit or loss on these option positions if the stock price is $18 on the day the options expire? Ignore trading costs and taxes.

  Explain the competitive and conversion effects of exchange

explain the competitive and conversion effects of exchange rate changes on the firms operating cash

  Determine average investment in accounts receivable

The Allen Corporation has monthly credit sales of $600,000. The average collection period is 90 days. The expenses of production is 70% of the selling price.

  Determine the retail price charged to consumers

If the manufacturer sells directly to a retailer who then adds a set margin of 40 percent based on selling price, determine the retail price charged to consumers.

  Under what conditions is it advantageous for a shareholder

Under what conditions is it advantageous for a shareholder to hold §1244 stock?  Why did Congress bestow these tax benefits on holders of such stock?

  Investment decision rule problems

Investment Decision Rule Problems : -  A $25 investment produces $27.50 at the end of the year with no risk. If the OCC = 10% annually is this a good investment?

  Percentage gain or loss translated into dollars

You invest in the Canadian Equity market and you lose 20 percent (quoted in Canadian dollars). In the meantime the United States dollar declines by 5 percent against the Canadian dollar. What is your percentage gain or loss translated into dollars..

  What is the optimal decision according to the emv criterion

However, if the referendum fails, he believes he could sell the property for only $ 1.15 million. a. Develop a decision tree for this problem. b. What is the optimal decision according to the EMV criterion

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