Mutual fund for investor with risk-aversion parameter

Assignment Help Financial Management
Reference no: EM132072706

The risk-free rate of return is 1%. The expected return and standard deviation of a mutual fund are 12% and 18%, respectively. What are the expected return and standard deviation of the optimal combination of risk-free security and mutual fund for an investor with risk-aversion parameter of 4?

Reference no: EM132072706

Questions Cloud

What is the investor risk-aversion parameter : What is the investor’s risk-aversion parameter?
Type of finance position would you want after graduation : what type of finance position would you want after graduation? Why?
Calculate the capital requirements : Consider a financial institution with a mortgage pool with a total size of 200000 USD. Calculate the capital requirements.
Price volatility and equity prices from these sectors : With the resulting portfolio you can now analyze the relationship between oil price volatility and equity prices from these sectors.
Mutual fund for investor with risk-aversion parameter : What are the expected return and standard deviation of optimal combination of risk-free security and mutual fund for investor with risk-aversion parameter of 4?
What will be the current market price of the firm bonds : Assuming semiannual coupon payments what will be the current market price of the firm's bonds?
Calculate the new PE ratio of the firm : U.S. Bluechips has a new project that will increase earnings by $201,000 in perpetuity. Calculate the new PE ratio of the firm.
What will be the probability of loss on portfolio : What will be the probability of loss on this portfolio?
The firm is under-valued or over-valued : Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under-valued or over-valued.

Reviews

Write a Review

Financial Management Questions & Answers

  Concept of duration and then comment on the statement

Explain the concept of duration and then comment on the statement, “It is possible that a bond with a shorter maturity than another bond may actually have a longer duration and be more price sensitive to interest rate changes.” Explain why a bond wit..

  What do you think elan is worth

Using the sales forecasts for Tysabri presented in Exhibit A, what do you think Elan is worth?

  Terms best describes? stewart strategy

Stewart Corporation plans to grow by offering a sound? system, Which of the following terms best describes? Stewart's strategy?

  The task of estimating the value of its equity

Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity. Management plans to maintain debt at 36% of the company’s present value, and you believe that at this capital structure the company’s d..

  What is the estimated required rate of return

What is the estimated required rate of return on Woidtke's stock? What stock price is expected 1 year from now?

  Evaluate the proposed acquisition of new computer

The president of Lowell Inc. has asked you to evaluate the proposed acquisition of a new computer.

  Mature manufacturing firm

Antiques ‘R’ Us is a mature manufacturing firm.

  What should be the current stock price

Company Z’s earnings and dividends per share are expected to grow indefinitely (i.e. forever) by 5% per year. If next year’s dividend is $10 and the required rate of return is 10%, what should be the current stock price?

  What would the going-in capitalization rate be-calculate

A company is considering the purchase of an office property. It has done an extensive market analysis and has estimated that based on current market supply/demand relationships, rents, and its estimate of operating expenses, annual net operation inco..

  The type of ratio that indicates the firms ability

The type of ratio that indicates the firm’s ability to provide adequate returns in the form of dividends and share price appreciation is:

  Introduce new portable camper to fill out its product line

Winnebagel Corp. currently sells 28404 motor homes per year at $65307 each, and 10511 luxury motor coaches per year at $91818 each. The company wants to introduce a new portable camper to fill out its product line; What is the annual sales figure you..

  What is the companys cost of common equity

COST OF EQUITY WITH AND WITHOUT FLOTATION Javits & Sons’s common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year , and the constant growth rate is 5% a year. What is the compa..

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