Calculate expected rate of return for both

Assignment Help Financial Management

Reference no: EM131625209

For Commonwealth Bank

Beta (β) =1.11

Market return (Rm) = 7%

Risk-free return (Rf) = 3.25%

For Rio-Tinto

Beta (β) =0.95

Market return (Rm) = 7%

Risk-free return (Rf) = 3.25%

Calculate expected rate of return for both and also the construct a portfolio made up of 60% CBA and 40% RIO.

Based on your understanding of the CAPM and the SML, which of these asset(s) or portfolio(s) would you invest in and which would you not invest in. Explain your choice .

Reference no: EM131625209

Questions Cloud

Explain what is meant by business and financial risk : Explain what is meant by business and financial risk. Suppose Firm A has greater business risk than Firm B.

Make product or provide service that someone values : It is argued that “every organization must make a product or provide a service that someone values.”

The tax effect of traditional retirement plan : The tax effect of a traditional retirement plan is to _____ taxes.

What is delta of tranche with respect to index : What is the tranche expected loss? What is the delta of tranche with respect to index?

Calculate expected rate of return for both : Calculate expected rate of return for both and also the construct a portfolio made up of 60% CBA and 40% RIO.

Based on the same interest payments of simple interest loan : Discuss how decreasing the interest rate effects the principle amount based on the same interest payments of a simple interest loan?

What is cross-rate in terms of yen per pound : Suppose the Japanese yen exchange rate is ¥84 = $1, and the British pound exchange rate is £1 = $1.52. What is the cross-rate in terms of yen per pound?

What level of dollar sales will home office systems group : At what level of dollar sales will the Home Office Systems group break even?

What monthly payment made at the end of each month : What monthly payment made at the end of each month to an account that pays 7.5% compounded monthly will achieve his objective?

User Account

All Pages