What is the reward-to-variability ratio for the equity fund

Assignment Help Finance Basics
Reference no: EM131970699

Question: An equity fund has an expected risk premium of 4% and an expected standard deviation of 10%. The rate on Treasury bills is 5%. An individual with $100,000 chooses to invest $50,000 of her portfolio in the equity fund and $50,000 in a T-bills.

A) What is the expected rate of return and standard deviation of return on the individual's portfolio?

B) What is the reward-to-variability ratio for the equity fund by itself?

Reference no: EM131970699

Questions Cloud

What is the total tax liability for the corporation : What would you recommend that Lucy do to imporve the overall tax situation if she prefers to operate as a C corp?
What is the amount of the company accounts receivable : Essence of Skunk Fragrances, Ltd., sells 6,200 units of its perfume collection each year at a price per unit of $392. All sales are on credit with terms.
What is the npv of project : The discount rate the firm wants to use for the project is 14.7 percent. What is the NPV of this project? (Enter answer in millions.)
What did the fomc decide in its last meeting : If the Federal Reserve believes that the economy is heating up and there is a risk that inflation may accelerate
What is the reward-to-variability ratio for the equity fund : An equity fund has an expected risk premium of 4% and an expected standard deviation of 10%. The rate on Treasury bills is 5%.
What is the firm weighted average cost of capital : The U.S. Treasury bill is yielding 3.7 percent and the market risk premium is 7 percent. Parole's tax rate is 37 percent. What is the firm's weighted average.
Find what are the possible consequences : Becky Knauer recently resigned from her position as controller for Shamalay Automotive, a small, struggling foreign car. What are the possible consequences?
What is a target capital structure : What is a target capital structure? How does the WACC relate to the target capital structure? How does the degree of operating leverage affect capital.
If its marginal tax rate is 40 what is lls after-tax cost : LL believes it could issue new bonds at par that would provide a similar yield to maturity.

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the cost of leasing the equipment

Thomas Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 35% . The company expects to use the equipment for 4 years.

  Bell mountain vineyards is considering updating its current

bell mountain vineyards is considering updating its current manual accounting system with a high-end electronic system.

  Discuss the inflation rate in the united kingdom

During 2004, the inflation rate in the United Kingdom was about 1.6 percent. At the beginning of that year, the national debt of the United Kingdom was about.

  Escapists film corp sells home videos ina boom economy its

escapists film corp. sells home videos. ina boom economy its rate of return is negative 28 in a normal economy its rate

  How many total votes can be cast

Betsy Ross owns 981 shares in the Hanson Fabrics Company. There are 11 directors to be elected, and 42, 500 shares outstanding. The firm has adopted cumulative.

  Focus on one of the most interesting concepts you learned

focus on one of the most interesting concepts you learned. Examples would be the an overview of corporate financing or Lease v. Buy discussion, Risk Management and how International Investment has other things to consider,

  What amount of shipping department costs

During the period, the Far East sales office generated 684 orders for a total of 6,120 items. These orders were shipped in 1,474 boxes. What amount of shipping department costs should be allocated to these sales?

  Slight difference due to rounding

Confirm that your answer to part c is correct by going to Appendix B (present value of $1) for n = 3 and i = 8%. Multiply this tabular value by $5,000 and compare your answer to part c. There may be a slight difference due to rounding.

  Guidance of non-installment

A check for Rs. 300 got from Mr. Dass Gupta and stored in the bank was shamed however guidance of non-installment was not got from the bank upto 31st March.

  What average annual return do you need on your investments

What average annual return do you need on your investments between now and retirement to reach your number? How might you achieve this rate of return?

  What is the value of a share of stock of hov inc

What is the value of a share of stock of HOV Inc. to an investor who requires a 12 percent rate of return if HOV's current dividend is $1.20? Assume earnings and dividends are expected to grow at a compound annual rate of 7 percent.

  Shorter cash conversion cycle

All things being equal, would a firm prefer a longer or shorter cash conversion cycle? What are some examples or ways a firm could attain this?

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