Efficient portfolio and expected return

Assignment Help Financial Management

Reference no: EM131559548

You wish to calculate the equilibrium expected return for Stock I, E(R. You assume that the capital asset pricing model holds. You know that the risk-free return is 0.01 (1%), the market risk premium is 0.07, and the covariance between the return on Stock I and the market portfolio is 0.08. You also know that an efficient portfolio has and expected return of 0.0625 and a return standard deviation of 0.15. What is the expected return on Stock I?

a. 0.0450

b. 0.1150

c. 0.1500

d. 0.1733

Reference no: EM131559548

Questions Cloud

How can it workers find out what happened : How can IT workers find out what happened? What tools are available to them to investigate the issue and be sure it does not recur?

Create a class called employee that includes three pieces : Create a class called Employee that includes three pieces if information as data members---a first name (type string), a last name (type string).

What is the frequency distribution : DRIVING AGE REQUIREMENTS The minimum age requirement for a regular driver's license differs from state to state. The frequency distribution for this age.

Cash should be paid to holders of these bonds for interest : On the first seminannually intrest rate, what amount of cash should be paid to the holders of these bonds for interest?

Efficient portfolio and expected return : You also know that an efficient portfolio has and expected return of 0.0625 and a return standard deviation of 0.15. What is the expected return on Stock I?

Common in the business world : Three-letter acronyms are common in the business world. For example, in Java you use the IDE (Integrated Development Environment) in the JDK.

Regarding a potential restructuring of business operations : Jerry Jeff Keen, the CFO of Boots Unlimited, a Texas corporation, has come to you regarding a potential restructuring of business operations.

Explain personally identifiable information : Proper disposal procedures for old computer equipment. Explain Personally Identifiable Information (PII) and its importance when dealing with customer data.

Graph the histogram associated with the data : The distribution of the number of chocolate chips (x) in a cookie is shown in the following table. Find the mean and the variance of the number of chocolate.

User Account

All Pages