The proportion of the optimal risky portfolio

Assignment Help Financial Management
Reference no: EM13951864

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 14% and a standard deviation of 20%. Stock B has an expected return of 10% and a standard deviation of 5%. The correlation coefficient between the returns of A and B is .5. The risk free rate of return is 6%. The proportion of the optimal risky portfolio that should be invested in Stock A is

Reference no: EM13951864

Questions Cloud

Fund average standard deviations betas : The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below: Fund Average Standard deviations Betas
Discuss the single most surprising or interesting lesson : Considering everything you have learned in this course, discuss the single most surprising or interesting lesson learned. Explain what made it so
Improve ethics in finance and corporate governance : Research and write an essay on what must be done to improve ethics in finance and corporate governance. Your paper should be 4–6 pages in length, and include three outside references.
How does the moon cause the earth tides : What are the different theories proposed for the formation of the Moon. What is the most widely accepted theory?
The proportion of the optimal risky portfolio : An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 14% and a standard deviation of 20%. Stock B has an expected return of 10% and a standard deviation of 5%. The correlation coefficient between th..
Evaluate the requirements for the court of federal claims : Evaluate the requirements for the Court of Federal Claims to hear a complaint and give your opinion on which requirements are justified, which are not, and which additional requirements would be advisable. Explain what, in your opinion, makes thes..
The value of imperfect forecasting ability : Portfolio managers Martin and Krueger each manage $3.6 million funds. Martin has perfect foresight, and the call option value of his perfect foresights is $540,000. Kreuger is an imperfect forcaster and correctly predicts 50% of all bull markets and ..
Compare bilateral modification and unilateral modification : Compare and contrast bilateral modification and unilateral modification. Provide an example or scenario of each that clearly demonstrates how each modification type is used
How do wireless will affect these figures in near future : Present the data in a clear and easy to understand way. You should also include the source of the data, clear labels and units and make sure the data is presentable.

Reviews

Write a Review

Financial Management Questions & Answers

  Payback period considers timing and amount of cash flows

The payback period rule states that you should accept a project if the payback period is less than one year. The payback period considers the timing and amount of all of a project's cash flows. You are analyzing a short-term project with conventional..

  Bonds on the market making annual payments

Essary Enterprises has bonds on the market making annual payments, with ten years to maturity, a par value of $1,000, and selling for $968. At this price, the bonds yield 6.9 percent. What must the coupon rate be on the bonds?

  Face value bond is currently quoted

A $1,000 face value bond is currently quoted at 101.2. The bond pays semiannual payments of $28.50 each and matures in six years. What is the coupon rate?

  Used by the company to hedge its exposure

A US company knows it will have to pay 3 million euros in three months. The current exchange rate is 1.4500 dollars per euro. Discuss how forward and options contracts can be used by the company to hedge its exposure.

  What is the effective cost of borrowing in case

Your firm has an average collection period of 29 days. Current practice is to factor all receivables immediately at a 1.25 percent discount. What is the effective cost of borrowing in this case? Assume that default is extremely unlikely

  What can be done to improve ethics in finance

What can be done to improve ethics in finance? What can be done to improve ethics in corporate governance?

  Prepare swag''s consolidated balance sheet

Prepare Swag's consolidated balance sheet under and prepare the consolidated financial statements for 20X3 using the direct method

  Taxed on the individuals personal tax returns

Income and loss from which of the following entities is passed through and taxed on the individual's personal tax returns?

  What are the flotation costs for issuing the preferred share

The preferred stock of Gator Industries sells for $34.63 and pays $2.77 per year in dividends. What is the cost of preferred stock financing? What are the flotation costs for issuing the preferred share and how should this cost be incorporated into t..

  What is the future value if payments are an annuity due

Suppose you are going to receive $17,500 per year for five years. The appropriate interest rate is 10 percent. What is the present value of the payments if they are in the form of an ordinary annuity? What is the future value if the payments are an a..

  Assume the projects cost of capital

Find the NPV and PI of a project that costs $1,500 and returns $800 in year one and $850 in year two. Assume the project’s cost of capital is 8%.

  With projected annual sales growth

With a projected annual sales growth of 15% projected annual earnings retention of 12%, and a cash cycle of 30 days, is there a need for external financing?

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