Computing investor-s average degree of risk aversion

Assignment Help Finance Basics

Reference no: EM1310154

1) The expected rate of return on the market portfolio is 9% and the risk–free rate of return is 3%. The standard deviation of the market portfolio is 22%. What is the representative investor’s average degree of risk aversion?

2) Stock A has a beta of= 1.25 and standard deviation of return of= 32%. Stock B has a beta of= 1.95 and standard deviation of return of= 40%. Suppose that you form portfolio that is 60% invested in Stock A and 40% invested in Stock B. By using information in question 1, according to CAPM, determine the expected rate of return on your portfolio? What is your best estimation of correlation between stocks A and B?

Reference no: EM1310154

Questions Cloud

Enhance the teams cohesiveness : Illustrate steps might you take to enhance the team's cohesiveness. Elucidate how successful do you think such as effort would be.

What focal length lens will be required : An instructor wants to use a lens to project the real image of a light bulb onto a screen 1.23 m from the bulb. In order to get the image to be two times as large as bulb, what focal length lens will be required.

Computation of effective annual yield bond value : Computation of effective annual yield bond value Assume that the 5-year bond paying $40 semi-annually is purchased at par

Revisit those training issues as you begin to develop : Now it is time to revisit those training issues as you begin to develop a training session for EITHER the sales OR customer service department.

Computing investor-s average degree of risk aversion : The standard deviation of the market portfolio is 22%. What is the representative investor’s average degree of risk aversion?

What is the increase in temperature of the bullet : A 25 g of copper pellets are removed from a 300 C oven and immediately dropped into 120 mL of water at 18 C in an insulated cup. What will the new water temperature be.

Present it as a formal case study report : You then take the information you have learned also present it as a formal case study report. For this case a specific recommendation is not required.

Estimate by what proportion directly above the pocket of oil : Ice at -13.7 °C and steam at 114 °C are brought together at atmospheric pressure in a perfectly insulated container. After thermal equilibrium is reached, the liquid phase at 43.3 °C is present. Ignoring container and equilibrium vapour pressure of t..

Microsoft hope its new way of organizing : In Illustrate ways does Microsoft hope its new way of organizing will help it to continually improve its competences also technology.

User Account

All Pages