What percentage of risky portfolio will maximize utility

Assignment Help Financial Econometrics
Reference no: EM13335069

A fund has expected risk premium of 8% and an expected SD of 20%. T-Bill is 3%. Utility function is U=E(r)-2.5SD^2. What percentage of risky portfolio will maximize utility? What is the E(r) and SD of combined portfolio?

Reference no: EM13335069

Questions Cloud

Integrated software application for patient records mgmt : Assume that you have been asked to procure a new integrated software application for patient records management.
What is the angular speed of the bar : A small 15.0-g bug stands at one end of a thin uniform bar that is initially at rest on a smooth horizontal table. What is the angular speed of the bar just after the frisky insect leaps
What is the expected rate of return on the market : The expected rate of return on stock in Company D is currently 10%. Company D has a Beta of 1.40. If the risk free rate of interest is currently 3%, what is the expected rate of return on the market
Establish a uniform system of reporting : What are the problems when an MNC tries to establish a uniform system of reporting for its worldwide operations? How can these problems be solved?
What percentage of risky portfolio will maximize utility : A fund has expected risk premium of 8% and an expected SD of 20%. T-Bill is 3%. Utility function is U=E(r)-2.5SD^2. What percentage of risky portfolio will maximize utility
Determine what is clarks wacc to fund capital projects : Clark Communications has a capital structure that consists of 70% common stock and 30% long-term debt. In order to calculate Clark's WACC, an analyst has accumulated the following information
The steady state total output grows at what percent rate : In a Solow Growth model with technological change, if population grows at a 2 percent rate and the efficiency of labour grows at a 3 percent rate, then the steady state total output grows at what percent rate?
Human capital management and human resources management. : Discuss the key elements in the definition of Human Capital (HC) in relation to differentiating between the study of Human Capital Management and Human Resources Management.
Determine the taxable year of the llc : Determine the taxable year of the LLC under the Code and Regulations and two years after formation of the LLC, Barney sells half of his interest (25%) to Aldrin, Inc. Can the LLC retain the taxable year determined in part (a)? Why or why not?

Reviews

Write a Review

Financial Econometrics Questions & Answers

  What is the initial cash flow and the terminal cash flow

Over the past year, Home Furnsihing Express has spent $17 studying the market for the new project. The accountants estimate that store overhead will increase due to the addition of the new back office personnel.

  What was the firms cash flow to creditors during 2010

The December 31, 2009, balance sheet of Schism, Inc., showed long-term debt of $1.395 million, and the December 31, 2010, balance sheet showed long-term debt of $1.57 million.

  Determine how many cars must the firm sell to break even

Assume your firm is an auto manufacturer. Its fixed cost for a certain type of car is $5 billion. The variable cost per unit is $18,000, and you sell the car for $30,000.

  How many years do the bonds have left until they mature

Martin Software has 10.0 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.8 percent of par.

  What is the future value of these investment cash flows

Trigen Corp. management will invest cash flows of $1,263,837, $548,573, $1,448,382, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years.

  By how much did the companys retained earnings increase

Columbia Company earned $880 million last year and paid out 25% of earnings in dividends. There were 150 million shares of stock outstanding at a price of $65 per share. By how much did the company's retained earnings increase

  Determine what are earnings and dividends per share

That Wich Corp. had additions to retained earnings for the year just ended of $328,000. The firm paid out $176,000 in cash dividends, and it has ending total equity of $4.81 million.

  Calculate weighted average cost of capital given a tax rate

The cost of financing with retained earnings is re = 12%, the cost of preferred stock financing is rPS = 7%, and the before-tax cost of debt is rd = 9%. Calculate the weighted average cost of capital (WACC) given a tax rate of 35%.

  Determine what was the percent return of rx corp stock

Rx Corp stock was $60.00 per share at the end of last year. Since then, it paid a $1.00 per share dividend. The stock price is currently $62.50. If you owned 400 shares of Rx, what was your percent return

  Determine what is the aftertax cost of debt

Mullineaux Corporation has a target capital structure of 65 percent common stock, 10 percent preferred stock, and 25 percent debt. Its cost of equity is 11 percent, the cost of preferred stock is 6 percent

  What effect would increase of selling price have on cash

You are analyzing a project and have developed the following estimates: unit sales = 1,320, price per unit = $79, variable cost per unit = $43, fixed costs = $24,900. The depreciation is $11,300 a year and the tax rate is 40 percent.

  What is yield that trevor would earn by selling bonds today

he bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,063.49, what is the yield that Trevor would earn by selling the bonds today

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