Constructing portfolio of two assets

Assignment Help Financial Management
Reference no: EM131930456

You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 12 percent and 23 percent, respectively. The standard deviations of the assets are 17 percent and 30 percent, respectively. The correlation between the two assets is 0.19 and the risk-free rate is 3 percent. What is the optimal Sharpe ratio in a portfolio of the two assets? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your Sharpe ratio answer to 4 decimal places when calculating your answer. )

Reference no: EM131930456

Questions Cloud

Which direct materials inventory is carried at standard cost : Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost.
Identify the top issues that hr executives will face : Identify the top issues that they think HR executives will face in the next 10 years.
Laws related to the business decision in the past : Explain how other domestic companies have managed to comply with the U.S. laws related to the business decision in the past.
Determine what the researcher intends to research : MGMT 650 Critical Review Assignment - Is the research problem clearly stated? Is it easy to determine what the researcher intends to research
Constructing portfolio of two assets : You are constructing a portfolio of two assets, Asset A and Asset B. What is the optimal Sharpe ratio in a portfolio of the two assets?
Starbucks global supply chain challenge : Describe the theory behind "From bean to cup: Starbucks global supply chain challenge." Give details of how this works or does not work for them and why.
What is the significance of the hijrah in Islamic history : What is the significance of the hijrah in Islamic history? Why is this event so important to Muslims? How does the Qur'an and Hadith influence lives of Muslims
What is the required rate of return on stock : What is the required rate of return on this stock?
Why is napoleon bonaparte important in history : why is napoleon bonaparte important in history. Each source in the bibliography must be cited at least once in the paper.

Reviews

Write a Review

Financial Management Questions & Answers

  How purchasing an asset or bonds could potentially impact

Provide an example of how purchasing an asset or issuing stocks or bonds could potentially impact earnings targets.

  The london interbank offered rate

The London Interbank Offered Rate (LIBOR)

  Any tax saving-mitigation plans you could offer

What, if any, Sales Tax obligations does HEARTCO have as to its sales to customers? Any tax saving/mitigation plans you could offer?

  Million shares with market value

Slico Co. has in issue, 1.5 million shares with a market value of $4 per share. It is expected to pay a dividends of $1.05, which is expected to grow at a rate

  Collections float and disbursement float

On a typical day,U.C. Stars Vision Center writes $30,000 in checks, which take THREE days to clear. They receive an average of $40,000 in checks from patients on a daily basis, which take five days to clear. (Show your work) What is U.C.’s disburseme..

  What was the company cash coverage ratio for year

The firm paid $3,537 in total interest expense and deducted $5,773 in depreciation expense. What was the company’s cash coverage ratio for the year?

  How much needs to be deposited to set up the annuity

A grandfather sets up a trust for his only grandchild. The trust consists of an annuity that will pay $5,000 monthly to the grandchild for 18 years. The annuity pays an annual return of 5% and makes the payments monthly at the end of the month. The a..

  Wealth maximization to goal of financial management

How do we link shareholder wealth maximization to the goal of financial management?

  Make about the company solvency or creditworthiness

What is the most likely conclusion an analyst would make about the company's solvency or creditworthiness?

  What is the value of company based on correct calculation

LIS Company has $50 million in long-term debt, $75 million in shareholder’s equity [both figures are market value basis]. The cost of equity is 14%, cost of long-term debt is 12% and the tax rate is 25%. What is the weighted average cost of capital [..

  The growth rate in dividends is expected to be constant

Shark Inc. just paid a dividend of $3.65 on its stock. The growth rate in dividends is expected to be a constant 7 percent per year indefinitely. Investors require a return of 15 percent for the first three years, a return of 13 percent for the next ..

  Issued stock dividends during the current period

For this discussion, assume the role of an investor. How would you know whether the company you are considering to invest in has repurchased any of its own stock and/or issued stock dividends during the current period? Why is this important, and woul..

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!

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