How much should you invest in the risk-free security

Assignment Help Portfolio Management
Reference no: EM131451626

You want to create a $72,000 portfolio comprised of two stocks plus a risk-free security. Stock A has an expected return of 13.6 percent and Stock B has an expected return of 14.7 percent. You want to own $25,000 of Stock B. The risk-free rate is 3.6 percent and the expected return on the market is 12.1 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest in the risk-free security?

Select one: a. $12,921 b. $12,987 c. $13,550 d. $13,315 e. $12,775

Reference no: EM131451626

Questions Cloud

Beneficiary of life insurance policy : You are the beneficiary of a life insurance policy. You can earn 6% compounded monthly on your money. Which option should you take and why?
How can bp begin to restore its reputation going forward : At the age of 14 months old, most children in North America and Europe receive a triple vaccination against three diseases: measles, mumps, and rubella.
What is the geometric average return? : What is the geometric average return?
Determine the price elasticity of the products : To determine the price elasticity of the products and how to manipulate them so as to meet the need of the customers in the market and manage competition
How much should you invest in the risk-free security : If you want the portfolio to have an expected return equal to that of the market, how much should you invest in the risk-free security?
Describe the security features within the application : HIM 220 : Determine the necessary requirements of applications to ensure they adhere to applicable regulations. Explain each requirement.
Define relationship between job satisfaction and absenteeism : What is the relationship between job satisfaction and absenteeism? Job satisfaction and turnover? Which is the stronger relationship?
Demonstrate use of sql to perform olap operations : DS 715 - Assignment - Demonstrate use of SQL to perform OLAP operations; Estimated time to complete: 40 min reading +45-50 min.
What is your total return to date on this investment : What is your total return to date on this investment?

Reviews

Write a Review

Portfolio Management Questions & Answers

  Portfolio analysis

The stock with the lowest beta (0.76) is Apple Inc. stock. The stock with the highest beta (3.29) is Facebook Inc. stock. Beta for Apple Inc. stock is less that 1, it tells us that stock price is less volatile and risky than mark..

  Provide investment portfolio advice

Provide investment portfolio advice and management to a client.

  Evaluate total number of shares

EBV proposes to structure the investment as 5m shares of CP with FV of $5m, one-to one conversion to common, and no dividends. Total Valuation Estimated from Newco.

  Role of the imf and world bank

Economic and territorial logic of empire are not always aligned. Explain his argument in light of the role of the IMF and World Bank as forms of neo imperialism.

  Prepare a portfolio of stocks

Prepare a portfolio of stocks

  Which critically examines the benefits and risks to company

Which critically examines the benefits and risks to a company, of incorporating corporate debt into a portfolio of equity and debt.

  Compute the variance-covariance matrix

Compute the sample mean, variance, and standard deviation of these shares and compute the variance-covariance matrix V and Plot the daily share prices and daily returns for each individual asset.

  Net nominal rate of interest and net real rate of interest

What bank portfolio can guarantee the rate of return 1 to all type 1 people and the rate of return 1.2 to all type 2 people? How many goods are placed in storage? In capital?

  Right issue to improve financial status

If you are the CEO of a British company that now faces the loss of a lucrative contract in Malaysia because of the dispute. What action should you take and How do you think British government should respond to the Malaysian action?

  Calculate the cost of reinvested profits

Calculate the cost of reinvested profits and the cost of new common shares using the constant-growth DVM - Cost of reinvested profits versus new common shares-DVM

  Calculate the after-tax cost of debt

Cost of debt For each of the following bonds, calculate the after-tax cost of debt. Assume the coupons are paid semi-annually, that the tax rate is 40 percent, and that we are dealing with $1,000 of par value.

  Calculate the overall cost of capital for cartwell products

Calculate the overall cost of capital for Cartwell Products. Which projects should the firm select? Does your answer differ from your answer topart d? If so, explain why.

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