User Account

All Pages

Construct a portfolio out of stocks a and b

Assignment Help Finance Basics
Reference no: EM132675735

Assume that the APT holds for the following two stocks.

Stock A: rA, t = 9 + 4F1, t + 2F2, t + eA,t

Stock B: rB, t = 7 + 1F1, t + 4F2, t + eB,t

Riskfree: rf = 1

Construct a portfolio out of stocks A and B which is riskless in terms of factor 2.

How sensitive is this portfolio to factor 1 (that is, how many units of factor 1 risk)?

Reference no: EM132675735

Questions Cloud

Calculate the income including the original loan : Calculate the income (including the original loan) and expenditure for the first year to determine if the business, from a financial perspective
Give example of each of four major types of adjusting entry : Give an example that shows that difference between cash basis and accrual basis of accounting. Give an example of each of four major types of adjusting entry
Explain how a manager can use any 4 management decision : Giving examples, explain how a manager can use any 4 management decision models in the day-to-day running of the organization.
Create comparison table or matrix for various functions : Imagine that you are a project manager with a large hospital. Create a comparison table or matrix for the various functions.
Construct a portfolio out of stocks a and b : Construct a portfolio out of stocks A and B which is riskless in terms of factor 2.
Differentiate between quantitative vs qualitative research : Differentiate between Quantitative vs. Qualitative research. Bring out the steps in Conducting Experiments and their concerned design
Calculate the adjusted coast base of vesper : Calculate the adjusted coast base of vesper Lynd's partnership interest as of January 1,2019 and Determine the amount of gain or loss for Vesper Lynd
Find the value of the bond if the required return : 1. Novecente's has a $1,000 par-value bond with a 9% coupon rate outstanding. Interest is paid annually, and the bond has 12 years remaining to maturity.
Compute inventory on July : Compute inventory on July 31, 2016 and cost of goods sold for the month of July using following inventory costing methods: LIFO

Reviews

Write a Review

Finance Basics Questions & Answers

  How does compounding compare with discounting

Present values are negatively impacted by higher interest rates. How does compounding compare with discounting? How does the future value of an annuity.

  If the discount rate is 8 percent compounded monthly what

a 5-year annuity of ten 8000 semiannual payments will begin 9 years from now with the first payment coming 9.5 years

  Possible to earn on the dividend payments

Ignoring the interest that it might be possible to earn on the dividend payments, find the fair value for the futures if the current value of the index.

  What are the statement of the problems

What are the key facts in New Heritage Doll Company? What are the statement of the problems?

  Unique features of e-commerce

1. List and describe 3 unique features of E-commerce and list the potential benefits of E-Business.

  How the order will be processed if its a market order

Suppose that Ralph Skelton places an order to buy 100 shares of Google. Explain how the order will be processed if it's a market order. Would it make any difference if it had been a limit order? Explain.

  You have inherited 250 acres of prime iowa farmland there

you have inherited 250 acres of prime iowa farmland. there is an active market in land of this type and similar

  Create value for our shareholders

Will acceptance of Blackstone's offer create value for our shareholders?

  Determine if project is worthwhile using the payback method

It is expected that Dylans Donuts could sell the equipment at the end of its expected life for $15,000. Dylans marginal tax rate is 30% and its required rate of return is 12%. Dylans has a minimum required payback of 3 years.

  What change will occur in roe

On the other hand, suppose the bank's ROA drops by 50 percent. If total assets and equity capital hold their present positions, what change will occur in ROE?

  Computation of dividend yield of a company

One year ago, Bob Sakamano invested $10,400 in 200 shares of Vandalay Industries stock and just received a dividend payment (total) of $600. What was Vandalay Industry's dividend yield?

  What is the volatility of a portfolio consists of an equal

What is the volatility (standard deviation) of a portfolio that consists of an equal investment in 25 type S firms? What is the volatility (standarddeviation) of a portfolio that consists of an equal investment in 25 type I firms?

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