Diversified portfolio with a very large number of securities

Assignment Help Financial Management
Reference no: EM131458544

Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. If the standard deviation of your portfolio was 42% and the standard deviation of the market was 18%, what would be your estimate of the beta of the portfolio? Hint: Note that a well-diversified portfolio will have a firm-specific variance and a residual standard deviation = 0%. Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box.

Reference no: EM131458544

Questions Cloud

What in particular distinguishes it as a good or bad source : What is the title of your source, and where/how did you find it? Would this source be considered legitimate for writing a formal report?
Continuing threats to the security of e-commerce : Discuss existing and continuing threats to the security of E-Commerce and provide two (2) examples of ways to thwart these threats.
Describe kurt lewins proposition : Why is the study of consumer behavior important to marketers? If marketers can understand the behavior of consumers, they can offer the right products.
What meaning does this add to the use of the language : The first chapter of Genesis has God creating by speaking (e.g., "Let there be light," etc.). What meaning does this add to the use of the language of "Word" .
Diversified portfolio with a very large number of securities : Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds.
Physical location and interior design of a business : Explain how market research is important to physical location and interior design of a business.
What is a subculture : List the interpersonal determinants of consumer behavior. The interpersonal determinants of consumer behavior are cultural, social, and family influences.
Sustainability concerns of organization : Interview the leader of any organization with these questions to explore sustainability concerns of the organization including the name of organization.
What is effective annual rate on this arrangement : A firm sells its $1,090,000 receivables to a factor for $1,079,100.The average collection period is 1 month. What is effective annual rate on this arrangement

Reviews

Write a Review

Financial Management Questions & Answers

  Volume variance with a column for Routine Services

Greenview Hospital operated at 120% of normal capacity in two of its departments during the year. It operated 120% times 20,000 normal capacity direct labor nursing hours in routine services and it operated 120% times 20,000 normal capacity equipment..

  Calculate the debt limit for the mitchell family

Calculate the debt limit for the Mitchell family if their financial statement reads as follows:- total assets, including their home value of $380,000: $478,700

  Fixed asset is fully depreciated over the life of project

A five-year project has an initial fixed asset investment of $285,000, an initial NWC investment of $25,000, and an annual OCF of −$24,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

  Policymakers should do to the fed funds rate

What does the Taylor rule imply that policymakers should do to the fed funds rate under the following scenarios?

  The account earned annual compound interest

On Juan’s 26th birthday, he deposited $8,500 in a retirement account. Each year thereafter, he deposited $1,000 more than the previous year. Using a gradient series factor, determine how much was in the account immediately after his 35th deposit if: ..

  What would be the total return of bond in dollars

A 8.7 percent coupon bond with 19 years left to maturity is priced to offer a 6.85 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.5 percent. What would be the total return of the bond in dollars? What would b..

  Growing quickly-what is the current share price

Janicex Co. is growing quickly. Dividends are expected to grow at a rate of 26 percent for the next three years, with the growth rate falling off to a constant 8 percent thereafter. If the required return is 15 percent and the company just paid a div..

  What is the value of stock when the required return

Financial analysts forecast ABC Inc. growth for the future to be 12%. ABC's recent dividend was $1.50. What is the value of ABC stock when the required return is 15%?

  Value of the annuity

A 4-year annuity of eight $8,200 semiannual payments will begin 9 years from now, with the first payment coming 9.5 years from now If the discount rate is 14 percent compounded monthly, what is the value of this annuity five years from now? Value of ..

  About originate-to-distribute model

Which of the following is true about originate-to-distribute model:

  What is the projects NPV and What is the projects IRR

Lewis Finance Investor Group, Inc. is considering a new project, which would include opening a college textbook store approximately 2 miles north of campus on Rt. 53. The initial investment (outflow) will include inventory, land and a building. What ..

  Continously compounded zero rate

The 6-month zero rate is 6% with semiannual compounding. The price of a 1-year bond that provides a coupon of 10% per annum semiannually is 96. What is the 1-year continously compounded zero rate?

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