Beta is equal to the beta on your friends portfolio

Assignment Help Financial Management

Reference no: EM131054901

A friend says that she expects to earn 13.50% on her portfolio with a beta of 2.25. You have a two asset portfolio including stock X and a risk free security. The expected return of stock X is 11.50% and the beta is 1.75. The expected return on the risk free security is 3.50%. If you construct your portfolio so that its beta is equal to the beta on your friends portfolio, then what is the expected return of your portfolio ?

Reference no: EM131054901

Questions Cloud

Bought and sold in money markets : Which of the following are bought and sold in Money markets?

What is the preferred stock s current price : A company is expected to have a price per share of $7.80. If the company s preferred stock pays a dividend of $2.00 per year and has a required return of 5% what is the preferred stock s current price?

What is the liquidity premium of the corporate bond : A treasury bond that matures in 10 years has a yield of 3.3%. A 10-year corporate bond has a yield of 7% and a default risk premium of 2%. What is the liquidity premium of the corporate bond?

By what percentage will the market price change : A companies zero’s have a face value of $1,000 and mature in 18 years. They currently sell for $80.81 today. By what percentage will the market price change if the market’s required return falls by half?

Beta is equal to the beta on your friends portfolio : A friend says that she expects to earn 13.50% on her portfolio with a beta of 2.25. You have a two asset portfolio including stock X and a risk free security. The expected return of stock X is 11.50% and the beta is 1.75. The expected return on the r..

Expected return-standard deviation of variance portfolio : Consider two stocks, Stock D, with an expected return of 16 percent and a standard deviation of 31 percent, and Stock I, an international company, with an expected return of 9 percent and a standard deviation of 19 percent. What are the expected retu..

Expected return of the minimum variance portfolio : You are going to invest in Asset J and Asset S. Asset J has an expected return of 14.6 percent and a standard deviation of 55.6 percent. Asset S has an expected return of 11.6 percent and a standard deviation of 20.6 percent. The correlation between ..

Two risky assets-both of which plot on security market line : You own two risky assets, both of which plot on the security market line. Asset A has an expected return of 12.37% and a beta of 1.40. Asset B has an expected return of 14.13% and a beta of 1.65. If your portfolio beta is the same as the market portf..

The expected return on the risk free security : A friend says that she expects to earn 13.50% on her portfolio with a beta of 1.50. You have two-asset portfolios including stock X and a risk-free security. The expected return of stock X is 11.50% and the beta is 1.25. The expected return on the ri..

User Account

All Pages