What is the bond weight in the tangency portfolio

Assignment Help Finance Basics
Reference no: EM132063620

Question: You put 70% of your money in a stock portfolio that has an expected return of 11.75% and a standard deviation of 28%. You put the rest of the money in a risky bond portfolio that has an expected return of 2.65% and a standard deviation of 12%. The stock and bond have a corrleation of 0.33. Assume the risk free rate is 1.75%. What is the bond weight in the tangency portfolio formed by creating the optimal risky portfolio from this stock and bond portfolio?

Reference no: EM132063620

Questions Cloud

What are some other ways to estimate stellar distances : What is the most accurate method to calculate the distance to the stars? What are the limitations of this method?
The firm under each of the two proposed plans : What is the value of the firm under each of the two proposed plans?
What is the sensitivity ratio of npv to sales : Putzie is looking to start a company. The company will cost$100K to start. He expects that he will generate $250K per year in sales. But if things don't go.
Blood concentration of insulin in liver tissue : The Kd for binding of insulin to its receptor on liver cells is 1.4x10^-10M, If the ambient blood concentration of insulin in liver tissue is 5*10^-12M
What is the bond weight in the tangency portfolio : You put 70% of your money in a stock portfolio that has an expected return of 11.75% and a standard deviation of 28%. You put the rest of the money in a risky.
When can the money market hedge make sense : When can the money market hedge make sense?
Compute the peroni company futa contributions : Due to cash flow problems, the company did not make any SUTA payments until after the form 940 filing date. Compute Peroni Company FUTA contributions
Explain the sustainability policy of your company : MGMT 6031 :You are to conduct secondary research (i.e., no direct contact with company) from publicly available sources to provide an initial three-part.
Differs from an express power in that the implied power : An implied power differs from an express power in that the implied power:

Reviews

Write a Review

Finance Basics Questions & Answers

  Are onion farmers as a group better off because of the ban

Is it likely that banning trading futures contracts in onions reduced the volatility in onion prices? Are onion farmers as a group better off because of the ban?

  What is the annual yield-to-maturity of the bond

What is the annual yield-to-maturity of the bond? (I.e., what is the discount rate one needs to use to get the price of the bond given the future cash flow of $100 in one year?)

  Research a company from which you regularly purchase service

Use the internet to research a company from which you regularly purchase services, with a focus on that company's marketing strategy. Be prepared to discuss. From the e-Activity, assess the company's marketing strategy, with a focus on marketing mix...

  Affect the current price of the stock

Explain how would price of a share of stock vary with the time an investor prefers to hold the stock? That is, assume you have a planned holding period of three years and someone else has a planned holding period of 5 years.

  What is meant by organizational culture

Assume that you, as the vice president of engineering, are planning to hire a new system engineering department manager. What leadership characteristics would you identify as being critical (identify in order of importance)?

  What is the value of the fund today

Your brother, who is 6 years old, just received a trust fund that will be worth $21,000 when he is 21 years old. If the fund earns 0.11 interest compounded

  Binomial probability distribution

Let X be the number of field goals that Mimi scores in the game. As we know, the distribution of X is a binomial probability distribution. What is the number of trials (n), probability of successes (p) and probability of failures (q), respectively..

  Fed to influence interest rates

Compare longterm investments and short-term risks, in terms of the various types of risk to which investors are exposed. Describe your answers.

  Calculate the value for a company

Calculate the Value / EBIT multiple for a company with the following financial characteristics. Growth: 5% per year forever, ROIC: 20% return on invested.

  What type of companies can use job order or process costing

Question - Job Costing vs process costing - What type of companies can use job order costing or process costing. Please post a 100-150 word response

  The saliford corporation has a inventory conversion period

kanwai fans produces 25000 fans per day at a cost of 7.50 each. it takes the firm 12 days to convert raw materials into

  What is the net present value of the given project

A company is considering a 6-year project that requires an initial outlay of $29,000. The project engineer has estimated that the operating cash flows.

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