Illustrate the relationship between portfolio expected retur

Assignment Help Finance Basics
Reference no: EM131126400

Asset W has an expected return of 10.5 percent and a beta of .9. If the risk-free rate is 6 percent, complete the following table for portfolios of Asset W and a risk-free asset.

Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas. What is the slope of the line thatresults?

 

1455_l.jpg

Reference no: EM131126400

Questions Cloud

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?
Illustrate the relationship between portfolio expected retur : Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas. What is the slope of the line thatresults?
What is the expected return on a portfolio that is equally : a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of .5, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 12 percent, ..
What will the share price be in one year : A share of stock sells for $53 today. The beta of the stock is 1.2, and the expected return on the market is 12 percent. The stock is expected to pay a dividend of $1.10 in one year. If the risk-free rate is 5.5 percent, what will the share price be ..
What is the beta of your portfolio : You own 400 shares of Stock A at a price of $60 per share, 500 shares of Stock B at $85 per share, and 900 shares of Stock C at $25 per share. The betas for the stocks are 1.2, .9, and 1.6, respectively. What is the beta of your portfolio?
Discuss the impact of the systematic risk and firm specific : Trudy plans to respond to his client within the context of Modern Portfolio Theory. a. Contrast the concept of systematic and firm-specific risk and give one example of each. b. Critique the client's suggestion. Discuss the impact of the systematic r..

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the annual ocf for the project

Variable costs are 56 percent of sales, depreciation on the equipment to produce the new board will be $1,510,000 per year, and fixed costs are $1,410,000 per year.

  What is the minimax regret decision

Today's electronics specializes in manufacturing modern electronic components. It also builds the equipment that produces the components. Phyllis Weinberger.

  Describe the reasoning behind the focus on cash flows

Describe the reasoning behind focus on cash flows rather than accounting profits in making our capital-budgeting decisions. Discuss why are we interested only in incremental cash flows rather than total cash flows?

  Calculate variance and standard deviation for stocks a

Assume you have predicted the following returns for Stock A and B in four possible states of the economy. What is the expected return of each stock? Calculate the variance and standard deviation for Stocks A and B.

  What is the ytm for a twenty year bond

What is the YTM for a 20 year bond with an 8% coupon if the price is 98.50?

  Expected net cash flows

What is each project's MIRR at the cost of capital of 10%? At 17%? (Hint: Consider Period 7 as the end of Project B's life.) What is the crossover rate, and what is its significance?

  Esop investments

Emily, age 58, has been a participant in the Icon, Inc. ESOP for 15 years. She plans to retire at age 65.  How much must Icon allow Emily to diversify this year?

  Overall risk profile of the company

Overall Risk Profile of the Company: Overall risk profile of ABC Company based on current economic and industry issues that it may face are described below-

  Without referring to the preprogrammed function

Without referring to the preprogrammed function on your financial calculator, use the basic formula for present value, along with the given opportunity cost, r, and the number of periods, n, to calculate the present value of $1 in each of the cases s..

  How would the appreciation of the australian dollar

how would the appreciation of the australian dollar against the u.s. dollar would affect the return to a u.s. firm

  Prepare a schedule to determine the incremental cost

Crafty Tools manufactures an electric motor that is uses in many of its products. Organization is planning whether to continue manufacturing the motors or to buy them from an outside source.

  You deposit 30000 at the end of each of the next years

you deposit 30000 at the end of each of the next years into your bank. how much money will you have in 5 years later

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