Solution-Portfolio manager at collins asset management

Portfolio manager at collins asset management

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Reference no: EM133120386

You are a portfolio manager at Collins Asset Management. Your research department has developed the information shown in the following table.

	Estimated expected return	Standard deviation	Correlation with market portfolio
Stock X	8.8%	18.46%	0.3
Stock Y	6.3%	11.75%	0.7
Market index	8.5%	13%	1
T-bills	3%	0	0

Estimate the beta for X and Y.
If the CAPM holds true for both X and Y, what are their required returns?
Identify and justify which stock (stock X or Y) would be more appropriate for an investor who wants to add the stock to a well-diversified equity portfolio.
Estimate the required rate of return for a portfolio formed with 70% of wealth invested in X and 30% invested in Y, and determine if it is undervalued or overvalued.
If you want to hold stock X or Y as a single-stock portfolio, which one should you choose?
NO EXCEL, show your work

Reference no: EM133120386

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Portfolio manager at collins asset management

Reference no: EM133120386

Reference no: EM133120386

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