What is the expected return on portfolio

Assignment Help Financial Management
Reference no: EM131088146

A stock has a beta of 1.14 and an expected return of 10.5 percent. A risk free asset currently early 2.4 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets?

b. If a portfolio of the two assets has a beta of .92, what are the portfolio weights?

Reference no: EM131088146

Questions Cloud

Write a summary of your findings : Write a summary of your findings. Guidelines for your interview and sample questions are available on the companion Web site.
Prior to completing this discussion : Reflect IconReflect: In the Critical Literary Theories handout, four different kinds of critical approaches are presented. Consider which of the four theories you find most interesting as a means for understanding literature.
Find the duration of plan obligations if interest rate : A pension plan is obligated to make disbursements of $2.7 million, $3.7 million, and $2.7 million at the end of each of the next three years, respectively. Find the duration of the plan's obligations if the interest rate is 10% annually.
Discuss the legal position of the parties : Discuss the legal position of the parties involved in respect of the van, freezer and the washing machine.
What is the expected return on portfolio : A stock has a beta of 1.14 and an expected return of 10.5 percent. A risk free asset currently early 2.4 percent. What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has a beta of .9..
Calculate the expected NPV : An auto plant that costs $200 million to build can produce a line of flexfuel cars that will produce cash flows with a present value of $260 million if the line is successful but only $120 million if it is unsuccessful. Calculate the expected NPV
Information about the causes of patient complaints : The front office staff and nurses tally information about the causes of patient complaints. What quantitative performance improvement tool(s) would you use to select he problem areas to work on first?
The growing importance of global marketing : Based on topic of Global Markets, please post your comments on any one of the two questions. More and more companies are looking beyond the domestic market. Identify and briefly describe some of the forces that have resulted in increased global integ..
What is the composition of gdp by percentage : What is the composition of GDP by percentage?

Reviews

Write a Review

Financial Management Questions & Answers

  Lane french had bad credit rating

Lane French had a bad credit rating and went to a local cash center. He took out a $100.00 loan payable in two weeks at $109.50. What is the percent of interest paid on this loan? (Do not round intermediate calculations. Round your answer to the near..

  Stocks pay annual dividends that are expected to continue

Kwame owns one share of stock of Fairfax Paint and one share of stock of Litchfield Design. The total value of his holdings is 179 dollars. Both stocks pay annual dividends that are expected to continue forever. The expected return on Fairfax Paint s..

  Research a company that is in the franchise business

Briefly describe the company’s franchise structure which you researched. Suggest one (1) way in which the company could improve its franchise structure to make it more attractive to potential customers. Outline a fraud prevention plan for a retail or..

  What is the firms required rate of return

ABC Company's stock has a beta of 1.32, the risk-free rate is 5.25%, and the market risk premium is 5.50%. What is the firm's required rate of return?

  Settled an insurance claim

You just settled an insurance claim. The settlement calls for increasing payments over a five-year period. The first payment will be paid one year from now in the amount of $7,000. The following payments will increase by 3.5 percent annually. What is..

  Sinking fund and preferred dividends-out of current income

Goiânia Corporation is expecting to have EBIT next year of $11 million, with a standard deviation of $7 million. Goiânia has $35 million in bonds with coupon of 8%, selling at par, which are being retired at the rate of $2.5 million annually. Calcula..

  Expected rate of return-bond valuation

Holiday Hiatus, a luxury vacation rental company, issued 15 year bonds to raise the capital needed to construct a five-star, all-inclusive tropical resort on the island of Bermuda.  Those bonds are selling in the open market for $1,405, a premium in ..

  What is your estimate of stock bs price

The current dividend is $1.50, its current price is $15.90. You are an analyst and believe that the required return on Stock B is the same as that on Stock A. If Stock B pays a constant dividend of $ 2, what is your estimate of Stock B's price?

  Deposits are classified as transaction deposits

Suppose the reserve requirement for transaction deposits is 10% and it is 5% for nontransaction deposits. What is the total reserve requirement, in millions, for a bank with total deposits equal to $500 million, if $100 million of these deposits are ..

  How many months will the loan balance

Sarah recently borrowed $30,000 to purchase a new car. The car loan is fully amortized over 5 years. In other words, the loan has a fixed monthly payment, and the loan balance will be zero after the final monthly payment is made. The loan has an APR ..

  Construct a yield curve based on these reported yields

Construct a yield curve based on these reported yields, putting term-to-maturity on the horizontal (x) axis and yield-to-maturity on the vertical (y) axis.

  Indifferent between holding yahoo or treasury notes

Assume your utility has the form U: E(r) - ½(A)σ 2 ; at what level of risk aversion would be indifferent between holding Yahoo or Treasury notes? Suppose your risk aversion equals 4, you form a portfolio of 30% Yahoo and 70% Treasury notes, is this p..

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