Portfolios should have the most systematic risk

Assignment Help Financial Management
Reference no: EM13943634

Which one of the following portfolios should have the MOST systematic risk?

a. 50% in U.S. treasury bills and 50% in a market index mutual fund.

b. 20% in US treasury bills and 80% invested in a stock with beta =.80

c. 10% invested in a stock with a beta of 1.0 and 90% in a stock with a beta of 1.40

d. 100% invested in a mutual fund which mimics the overall market.

e. 100% in US treasury bills.

Reference no: EM13943634

Questions Cloud

Develop a techno-economic analysis : Waste Wood Biomass and Energy Issues and develop a techno-economic analysis of Thermo chemical processing route for the conversion of wood waste biomass in Nigeria to energy.
Information and communication technology infrastructure : In this Group Project, assume that you and the members of your group are top managers of a big international company spread over several continents. You decide to rebuild/expand your company's Information and Communication Technology infrastructur..
The discount rate and the time increases-the future value : Other things equal, as the discount rate and the time increases, the future value:
Value chain designs and structures : Task Identify two organisations in an industry of your choice. These organisations must have clearly different value chain designs and structures.
Portfolios should have the most systematic risk : Which one of the following portfolios should have the MOST systematic risk?
Find size of monthly payments he will be required to make : Joe secured a loan of $12,000 five years ago from a bank for use toward his college expenses. The bank charges interest at the rate of 4%/year compounded monthly on his loan. Now that he has graduated from college, Joe wishes to repay the loan by amo..
Exchange rate-dollar depreciated : Last week, the USD/ZAR exchange rate was 14.2125. This week, the exchange rate is 14.5447. How much has the South African rand depreciated/appreciated against the U.S. dollar? Last week, the USD/ZAR exchange rate was 14.2125. This week, the exchange ..
Which fits perfectly with your criminal justice degree : Started a career with the Office of Juvenile Justice and Delinquency Prevention, which is a part of the Department of Justice. You are a juvenile justice expert, which fits perfectly with your criminal justice degree
What would her monthly payment be : Oprah Winfrey has closed on a 42-acre estate near Santa Barbara, California, for $49,200,000. If Oprah puts 30% down and finances at 7% for 30 years, what would her monthly payment be? (Do not round intermediate calculations. Round your answer to the..

Reviews

Write a Review

Financial Management Questions & Answers

  Average does it take the firm to sell an inventory item

Bob Gibson's has sales for the year of $311,400, cost of goods sold equal to 78 percent of sales, and an average inventory of $42,800. The profit margin is 6 percent and the tax rate is 35 percent. How many days on average does it take the firm to se..

  Comparing two callable bonds that are exactly the same

You are comparing two callable bonds that are exactly the same; however one of them has a higher call premium. This bond is more likely

  Desires sustainable growth rate

Boyd Crowder's Chowder, Inc. desires a sustainable growth rate of 3.8 percent while maintaining a 49 percent dividend payout ratio and a 4.9 percent profit margin. The company has a capital intensity ratio of 1.21. What equity multiplier is required ..

  Purchase short-lived assets and frequently replace them

During periods of high inflation, U.S. firms have strong incentives to purchase short-lived assets and frequently replace them, rather than investing in long-lived assets. True, False, Uncertain and Explain

  What amount of gain is realized on the sale

Please list all primary authority relied upon in completing (b) and (c): b) Timon decides to sell 5 acres of land for $100,000. The cost basis for the land is $37,500. Timon agrees to sell the property for four equal payments of $25,000 - one now and..

  Payout policy

Most utilities company in the United States pay regular dividends to their stockholders. On the other hand most of high tech companies pay little or no dividends. Discuss why they behave the way they do.

  What is the price and expected return relation

For a given set of possible cash flows, as the required risk premium for a project increases, its price must decrease to entice investors to purchase the asset. (Hint: What is the price and expected return (premium) relation?) Eurodollars are dollar-..

  Finco must determine how much investment

Finco must determine how much investment and debt to undertake during the next year

  Compute the cost of capital for the firm

(Individual or component costs of capital) Compute the cost of capital for the firm for the following: A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 11 percent. Interest payments are $55.00 and are paid semi..

  Principal of the loan and how much will go toward interest

You have just taken out a $22,000 car loan with a 6% APR, compounded monthly. The loan is for five years. When you make your first payment in one month, how much of the payment will go toward the principal of the loan and how much will go toward inte..

  Calculate the growth rate in dividends

You buy a share of The Ludwig Corporation stock for $22.30. You expect it to pay dividends of $1.01, $1.15, and $1.3094 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $29.62 at the end of 3 years. Calculate the growth rat..

  What action should you take to capitalize your prediction

The 6-month, 1-yr, 1.5-yr, and 2-yr interest rates are 1.75%, 2.00%, 2.25% and 2.50% with continuous compounding. a. Calculate the present value of $100 in 1.5 years (=18 months). Suppose a bank needs to borrow (not lend) $20 million for 3 months sta..

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