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Suppose you are restricted to investing in a portfolio of only 2 risky securities. The expected return on security A is 5% and the expected return on security B is 7%. The market portfolio, which is a combination of security A and B, has an expected return of 6%.
a.) Show how to construct an optimal portfolio with an expected return of 9%, assuming there is no risk-free asset.
b.) Show how to construct an optimal portfolio with an expected return of 7%, assuming there is a risk-free asset returning 2%.
c.) Suppose you form a portfolio by making a $10 investment in the risk-free asset and a $60 investment in the market-portfolio. What would the risk-free rate have to be if your portfolio has an expected return of 4%?
Suppose a? seven-year, $1,000 bond with a 8.14% coupon rate and semiannual coupons is trading with a yield to maturity of 5.75%.
The spot price of palladium is $786.20 per ounce. what forward price for palladium eliminates opportunities for arbitrage?
What is the present value of the 30-year plan?
computing level of earnings before interest and tax (EBIT) that would make shareholders indifferent between being unlevered-levered
What type of futures position should be taken to hedge against the stock market going down and how many future contracts are needed for this hedge?
EMC Corporation has never paid a dividend. Its current free cash flow of $350,000 is expected to grow at a constant rate of 5.4%. The weighted average cost of capital is WACC = 13.5%. Calculate EMC's estimated value of operations.
A record stating the amounts that are to go to the buyer and seller when a loan is closed is called
ABC does not wish its current ratio to drop below 2.8. Given that limitation, what is the maximum amount of additional inventory it can purchase?
Black-Scholes Model Assume that you have been given the following information on Purcell Industries: Current stock price = $12 Strike price of option = $11 Time to maturity of option = 6 months Risk-free rate = 8% Variance of stock return = 0.13 d1 =..
What would be the expected euro proceeds for Airbus if they decide NOT to hedge? How risky (certain/uncertain) is this cash flow?
What is the expected return on a portfolio that has $6,000.00 invested in the risk-free security and $4,000.00 invested in the market portfolio?
A sales opportunity grid evaluates retail goods /service alternatives on the basis of a. sales per square feet b. display costs c.markup d.net profit estimates.
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