Someone who believes that the collection of all stocks

Assignment Help Finance Basics

Reference no: EM13619379

Someone who believes that the collection of all stocks satisfies a single-factor model with the market portfolio serving as the factor gives you information on three stocks which make up a portfolio. In addiction, you know that the market portfolio has an expected rate of return of 12% and a standard deviation of 18% The risk-free rate is 5%.

a. What is the portfolio's expected rate of return?

b. Assuming the factor model is accurate, what is the stadard deviation of the rate of return?

For stock A: Beta = 1.1, standard deviation of random error term = 7% and the weight in portfolio = 20%

For stock B: Beta= .80, standard deviation of random error term = 2.3% and the weight in portfoilio = 50%

For stock C: Beta = 1.0, standard deviation of random error term= 1.0% and the weight in portfolio = 30%

Reference no: EM13619379

Questions Cloud

If the surroundings are at 100kpa and 24 degrees c : a piston-cylinder device contains 5 kg of refrigerant-134a at 0.7 mpa and 60 degrees c. the refrigerant is now cooled

Another european vanilla call option with stike price k2 gt : the riskless interest rate rgt0the underlier is trading at a spot price s and all options are european vanillas on the

Assume that the current cpi is 157 in 25 years the cpi is : assume that the current cpi is 157. in 25 years the cpi is expected to be 231. if the nominal rate of return is

A pellet gun is fired straight downward from the edge of a : a pellet gun is fired straight downward from the edge of a cliff that is above the ground. the pellet strikes the

Someone who believes that the collection of all stocks : someone who believes that the collection of all stocks satisfies a single-factor model with the market portfolio

A nearsighted person wearing identical contact lenses has a : a nearsighted person wearing identical contact lenses has a corrected range of clear vision from 20.8 cm near point to

Where must it strike the air water interface relative to : a beam of light is emitted in a pool of water from a depth of 69.7 cm. where must it strike the air water interface

A certain eye when relaxed needs a 067 d lens in front of : a certain eye when relaxed needs a 0.67 d lens in front of the eye to form a clear image on the retina of a distant

You are a manager working for an insurance company your job : you are a manager working for an insurance company. your job entails processing individual claims filed by

User Account

All Pages