Reference no: EM131316120
Suppose there are two assets, a risk-free asset, and a market portfolio. The market portfolio has an expected return of μm = E[Rm] = 15% and a standard deviation of σm = 15%. The return on the risk-free asset is Rf = 5%.
You are an investment manager. After thinking about the risk-return tradeoff, your client, Jim, decides to invest in a portfolio that would deliver an expected return of 10%.
(a) With the two assets above (risk-free assets and market portfolio), how are you going to construct the portfolio for Jim? What is the standard deviation of this portfolio?
(b) What is the Sharpe ratio for the market portfolio? What is the Sharpe ratio of Jim’s portfolio?
(c) Plot the capital allocation line with the risk-free asset and the market portfolio. Mark the risk-free asset, market portfolio, and Jim’s portfolio on the CAL.
(d) Now suppose that the market portfolio includes only two risky assets, A and B. The weight of asset A in the market portfolio is 40%. Suppose Jim decides to invest $1 million in his portfolio. What are the dollar amount investments in asset A, asset B, and the risk-free asset, respectively?
Describe capital budgeting considerations that you think
: Write a script to describe capital budgeting considerations that you think are important for managers to consider. Your script should be 200 to 250 words.
|
State the divergence theorem and discuss its application
: Are all Maxwell's equations in differential form independent? If not, which of them are independent?
|
Identify a health care issue that interests you and explain
: Write a proposal paper (1,250-1,500 words) for a major change project that you would like to lead. Identify a health care issue that interests you and explain why
|
How long will it take to pay back the return on investment
: Conduct research on your desired occupation and identify how much compensation (return) you expect to earn. How long will it take to pay back the return on this investment?
|
What is the standard deviation of this portfolio
: Suppose there are two assets, a risk-free asset, and a market portfolio. The market portfolio has an expected return of μm = E[Rm] = 15% and a standard deviation of σm = 15%. The return on the risk-free asset is Rf = 5%. With the two assets above (ri..
|
Created a thick institutional structure after world war
: The strategy whereby the United States created a thick institutional structure after World War II was known as: détente, or easing of tension. tying hands, or self-binding. containment, or balancing. balance of terror, or mutually assured destruction..
|
Find the magnetic field adjacent to the current sheet
: If the current density on the infinite plane current sheet of Figure 4.2 were directed in the positive y-direction, what would be the directions of the magnetic field adjacent to the current sheet and on either side of it?
|
Counter-act and contain the soviet union
: What is NOT one of the ways in which the United States attempted to challenge, counter-act, and contain the Soviet Union? Expanding NATO to Eastern European countries. Establishing the Marshall Plan and other forms of economic aid to Western Europe. ..
|
Analyze the spectrum of health care facilities
: For the next newsletter, you have been asked to write a 700- to 1,050-word article about the spectrum of health care facilities. In your article: Analyze the spectrum of health care facilities that exist in the U.S
|