The risky asset as function of the standard deviation

Assignment Help Financial Management

Reference no: EM131321454

Mr. K can invest the profits from his business either in a safe asset that has a return of 10% and no deviation from that return, or a risky asset with an expected return of 30% with a standard deviation of 10%. Write an equation showing the expected rate of return Mr. Krabs would expect from investing X% of his wealth in the risky asset as a function of the standard deviation (that is write something in the form r= α+ βσ, where α and β are numbers and σ is the standard deviation of the portfolio.

Reference no: EM131321454

Questions Cloud

Find the present value of the dividend stream : Your broker offers to seel you some shares of Bahnsen & Co. common stock that paid a dividend of $2.00 yesterday. Bahnsen's dividend is expected to grow at 5% per year for the next 3 years. Given that the first dividend payment will occur 1 year from..

Does this go beyond the social responsibilities of business : Describe the balance that you currently seek between career and family life. Do you believe that the mindset of corporate America is conducive to the type of work and family arrangement that would suit you? Explain the major reasons why or why no..

What is the maximum you can afford to borrow : Your spouse needs a car and you believe you can afford no more than $350 a month for a 5-year car loan. If the interest rate on this loan is 5% percent, what is the maximum you can afford to borrow to purchase this car?

What levels of evidence are present in relation to research : What levels of evidence are present in relation to research and practice and why are they important regardless of the method you use

The risky asset as function of the standard deviation : Mr. K can invest the profits from his business either in a safe asset that has a return of 10% and no deviation from that return, or a risky asset with an expected return of 30% with a standard deviation of 10%. Write an equation showing the expected..

Rating for city of indianapolis debt : In March 1982, Moody s lowered its rating for City of Indianapolis debt from Aaa to Aa. Which of the following would result from that change?

Write a temperature conversion program : This assignment will be to write a temperature conversion program that interacts with the end user - using the guidelines and sample output below.

Determine standard deviation of the expected return : Following are three economic states, their likelihoods, and the potential returns: Economic State Probability Return Fast growth 0.17 21 % Slow growth 0.50 10 Recession 0.33 –21 Determine the standard deviation of the expected return.

Study the various forms of activism : Software rating, although helpful in bringing awareness to concerned individuals, has not been successful. Discuss why.

User Account

All Pages