Portfolio that is equally invested in the two assets

Assignment Help Financial Management

Reference no: EM131063016

A stock has a beta of 19.5 and an expected return of 12%. A risk free asset currently earns 3.8%. (please show your calculation and formula used)

a) What is the expected return on a portfolio that is equally invested in the two assets?

b) If portfolio of the two assets has a beta of .78, what are the portfolio weights?

c) If the portfolio of the two assets has an expected return of 10%, what is its beta?

d) If a portfolio of the two assets has a beta of 3.9, what are the portfolio weights?

Reference no: EM131063016

Questions Cloud

Each bond and rdi is the coupon rate for each bond : Determine the firm’s rd from the 10-K report in the Note to the Long-term Debt, where rd = ∑(wdi*rdi), where wdi = the weight of debt for each bond and rdi is the coupon rate for each bond. Using Amazon 2015 data

What is the expected status of the content items in future : You are the new chief executive officer at Memorial Hospital. Memorial is a nonprofit hospital with 300 beds and is located in a busy metropolitan area directly adjacent to a large university. Identify three forecast content items. How will they be m..

What is the timeline-what is the APR of the loan : You have arranged for a loan on your new home that will require the first payment today. the loan is for $195,000, and the monthly payments are $1120. What is the timeline? what is the APR of the loan? If the first payment is in one month,

How much money must you deposit into savings account : How much money must you deposit into a savings account at the end of each year at 4% interest compounded annually in order to earn $9,778.08 interest during a 20-year period?

Portfolio that is equally invested in the two assets : A stock has a beta of 19.5 and an expected return of 12%. A risk free asset currently earns 3.8%. What is the expected return on a portfolio that is equally invested in the two assets? If portfolio of the two assets has a beta of .78, what are the po..

Common stock and preferred stock : Finding the WACC Given the following information for Fairview Co., find the WACC. Assume the company’s tax rate is 35 percent. Debt: 7,000 8 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 104 percent of par; the..

What is the current dividend per share : Suppose you know that a company’s stock currently sells for $56 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it..

After-tax cost of debt-cost of common stock-preferred stock : Fast Cash Limited has the following information and a tax rate of 30 percent. . Debt 700, 8 percent coupon bonds outstanding, $1,000 par value, 10 years to maturity, selling for 95 percent of par, currently selling for $115 per share Market 7 percent..

What is the current value of this stock : The last dividend paid by Lynwood Properties was an annual dividend of $1.20 a share. Dividends for the following 4 years will be increased at an annual rate of 12 percent. After that, dividends are expected to increase by 2 percent each year. The di..

User Account

All Pages