User Account

All Pages

Combines the risk-free asset and the market portfolio

Assignment Help Financial Management
Reference no: EM131819949

A portfolio that combines the risk-free asset and the market portfolio has an expected return of 6.8 percent and a standard deviation of 9.8 percent. The risk-free rate is 3.8 percent, and the expected return on the market portfolio is 11.8 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .43 correlation with the market portfolio and a standard deviation of 54.8 percent? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM131819949

Questions Cloud

What is an intangible asset : What does it mean if an exchange of plant assets has commercial substance? Are gains and losses recorded on the books because of the exchange?
Reproductive biology of the aquatic salamander amphiuma : In the article "Reproductive Biology of the Aquatic Salamander Amphiuma tridactylum in Louisiana" (Journal of Herpetology [1999]: 100-105)
Record the journal entry for purchase of the land : Determining the cost of an asset Alton Clothing purchased land, paying $88,000 cash plus a $250,000 note payable.
What are the tax savings from making the election : Using property she inherited, Myrna makes a gift of $6.2 million to her adult daughter, Doris. What are the tax savings from making the election
Combines the risk-free asset and the market portfolio : A portfolio that combines the risk-free asset and the market portfolio has an expected return of 6.8 percent and a standard deviation of 9.8 percent.
Prediction of defibrillation success from a single : A study, described in the paper "Prediction of Defibrillation Success from a Single Defibrillation Threshold Measurement"
Journalize the lump-sum purchase of the assets : Making a lump-sum asset purchase Foley Distribution Service paid $130,000 for a group purchase of land, building, and equipment.
What was the cash account balance after the transaction : Journalize the transactions. Number the journal page 1 and write the year at the top of the Date column. Describe each entry
Co variance between the returns on the two stocks : Stock Expected Return: A 10% B16% Standard Deviation A 34.0% B 63.0% The co variance between the returns on the two stocks is .0020.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the total cost of the watch radio for the five years

Dick Tracy builds a two way wrist radio for $8,000. It costs Dick $1800 a year to operate the radio. Dick uses the wrist radio for 5 years before upgrading the electronics for $3000. What is the total cost of the watch radio for the 5 years? Dick has..

  Find internal rate of return for series of future cash flows

Find the internal rate of return (IRR) for the following series of future cash flows.

  What is expected to be in the account

How much cash will he need five years from now in addition to what is expected to be in the account?

  Forecast the value of the cyprus pound

Small Corporation would like to forecast the value of the Cyprus pound (CYP) five years from now using forward rates. Unfortunately, Small is unable to obtain quotes for five year forward contracts. However, Small observes that the five year interest..

  With the growing popularity of casual surf print clothing

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor la..

  What is effective annual return

Friendly’s Quick Loans, Inc., offers you “$3.60 for $4.60 or I knock on your door.” This means you get $3.60 today and repay $4.60 when you get your paycheck in one week (or else). What’s the effective annual return Friendly’s earns on this lending b..

  Decided to use the money for college education

Adam Marcs, who graduated from high school last year and could not go to college for lack of funds, has just inherited $60,000 dollars from a distant relative. If we assume that Adam can earn 6% per year on his investments and savings, how much shoul..

  What are the two principal reasons for holding cash

What are the two principal reasons for holding cash?

  The new equipment will result in additonal depreciation

Beta Electronics is considering the purchase of testing equipment that will cost $828,000 to replace old equipment. Assume the new equipment will generate before-tax savings of $415,000 over the four years. The new equipment will result in additonal ..

  Sufficiently general to handle the case of zero growth stock

The constant growth model is sufficiently general to handle the case of a zero growth stock, where the dividend is expected to remain constant over time.

  What is your company weighted average cost of capital

Your company's target capital structure is 30% debt and 70% equity. The company's after-tax cost of debt is 8%. The company's beta is 1.3, the risk-free rate is 4%, and the market risk premium is 6%. The marginal tax rate is 35%. What is your company..

  Expect the spreads in bond yields to respond

How would you expect the spreads in bond yields to respond to the following macroeconomic events?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd