Computation of required return of a portfolio

Assignment Help Finance Basics

Reference no: EM1316624

Computation of required return of a portfolio and risk factor analysis

Stock X has a 10% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.

a) Calculate the required return of a portfolio that has $7500 invested in Stock X and $2500 invested in Stock Y.

b) If the market risk premium increase to 6%, which of the two stocks would have the larger increase in its required return?

Reference no: EM1316624

Questions Cloud

Assuring the snmp security : Create an argument for modifying to the other version or staying with v1 and forming the essential modifications to assure the SNMP security the v1 requires.

Quantity leader in stackelberg model : Suppose there are only two firms. It is better to be a quantity leader in a Stackelberg model than a member of a cartel in a one shot market. Use a graph if you want.

The probability that he or she will answer exactly six : An exam consists of 10 true or false questions. If a student guesses at every answer, what is the probability that he or she will answer exactly six questions correctly? (Round the answer to three decimal places)

Determining p-value when mean is given : At the 5 percent level of significance, can we conclude that the mean weight is greater than 16 ounces? Determine the p-value.

Computation of required return of a portfolio : Computation of required return of a portfolio and risk factor analysis and Calculate the required return of a portfolio that has $7500 invested in Stock X and $2500 invested in Stock Y

Determine the probability that two cards of the same suit : Suppose the probability of a boy being born is the same as the probability of a girl being born. Find the probability that a family with three children will have two boys and one girl.

Romance usa presentbooks sold are of romance genre : Romance USA present reported that 11 percent of all books sold are of the romance genre. If a local bookstore sells 316 books on a given day

Estimating population proportion-sample size : Determine the sample size needed in order to be 99% confident that the sample proportion of the current customer accounts is within .03 of the true proportion of all current accounts for this company.

What is the probability that the number is a multiple : Fifty raffle tickets are numbered 1 throughout 50, and one of them is drawn at random. What is the probability that the number is a multiple of 5 or 8? Consider the following "solution": Since 10 tickets bear numbers that are multiples of 5 and 6 ..

User Account

All Pages