What is the expected return on portfolio

Assignment Help Financial Management

Reference no: EM132003331

A stock has a beta of 1.75 and an expected return of 12 percent. A risk-free asset currently earns 3.0 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets? (Round your answer to 2 decimal places. (e.g., 32.16))

Expected return %

b. If a portfolio of the two assets has a beta of 0.98, what are the portfolio weights? (Round your answer to 4 decimal places. (e.g., 32.1616))

Weight of stock

Risk-free weight

c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places. (e.g., 32.161))

Beta

d. If a portfolio of the two assets has a beta of 3.50, what are the portfolio weights? (Negative amount should be indicated by a minus sign.)

Weight of stock

Risk-free weight

Reference no: EM132003331

Questions Cloud

Entering into three-year remodeling and expansion project : cccHome Place Hotels, Inc., is entering into a 3-year remodeling and expansion project.

Present value and the future vale is best described : The relationship between present value and the future vale is best described

What is price of six-month european call option : What is the price of a six-month European call option with a strike price of $50?

Calculate the annual debt service amount in each year : Calculate the annual debt service amount in each year the investor holds the property for the first (fixed-rate) loan offered.

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

Bound price of five-month european put option : What is the lowest bound price of a five-month European put option with a strike price of $27?

Call option on dividend-paying stock for no arbitrage : What should be the lowest bound price for a six-month European call option on a dividend-paying stock for no arbitrage?

Explain the terms positive and negative financial leverage : Debt is often used in the purchase of commercial real estate assets. Explain the terms positive and negative financial leverage.

How differences in interest rates effect forward rates : Show how differences in interest rates effect forward rates?

User Account

All Pages