What is the standard deviation of the rate of return

Assignment Help Corporate Finance

Reference no: EM132209151

Question - Assume that you manage a risky portfolio with an expected rate of return of 15% and a standard deviation of 31%. The T-bill rate is 5%.

Your risky portfolio includes the following investments in the given proportions:

Stock A 26 %

Stock B 33 %

Stock C 41 %

Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill money market fund so that his overall portfolio will have an expected rate of return of 14%.

a. What is the proportion y?

b. What are your client's investment proportions in your three stocks and the T-bill fund?

c. What is the standard deviation of the rate of return on your client's portfolio?

Reference no: EM132209151

Questions Cloud

Why is natural capitalism better than traditional capitalism : Why is natural capitalism better than traditional capitalism for sustainable development? Justify your answer using relevant example(s).

Why is sexual assault so rampant in the us military : For this week you read about sexual harassment and assault in the military. For this week's discussion you will be responding to a story on NPR.

How to overcome resistance to changes : As a manager, what should you do to manage people to receive changes? How to overcome resistance to changes?

Why the decision making is important in digital resolution : Why the decision making is important in digital resolution, industrial resolution and critical forces and the steps of the decision making?

What is the standard deviation of the rate of return : Assume that you manage a risky portfolio with an expected rate of return of 15%, What is the standard deviation of the rate of return on your client's portfolio

Do you believe would have more difficulty changing its cultu : Which organisation - Daimlerchrysler or Apple - do you believe would have more difficulty changing its culture? Explain your position.

Analyze the kinds of risks that are most intimidating : Explain how the risks and the approaches to anticipate these risks differ for each company. Analyze the kinds of risks that are most intimidating for each.

What is the conversion ratio of the bonds : What is the conversion ratio of the bonds? What number of shares outstanding will the issuance add if the bonds are exercised at maturity

Explain why you felt the article was relevant : Share a current event article with the class that relates to the concepts covered in this week's reading. Write a brief summary, and explain why you felt.

User Account

All Pages