Estimate the average beta of investment in the t-bills, Financial Management

Assignment Help:

You know that Treasury bills have a beta of 0 because they are risk-free.  A portfolio of technology stocks has a beta of 3.  You plan to invest 40% of your investment capital in Treasury bills and the remaining in the technology stock portfolio.  Additionally you know that the risk-free rate is 4% and the market risk premium is 6%.  Estimate first the average beta of your investment in the T-Bills and the technology stock portfolio and then the expected rate of return you should earn on this portfolio.

            ANSWER: Expected Rate of Return: __________________


Related Discussions:- Estimate the average beta of investment in the t-bills

PV Annuity , What is the present value of an annuity that makes a quarterly...

What is the present value of an annuity that makes a quarterly payment of $37,110 for 11 years, assuming an annual yield to maturity of 5%?

State the rate of return of a bond - debt securities, Rate of return of a B...

Rate of return of a Bond In case of bonds, rather than dividends, investor is entitled to payments of interest yearly or semi-annually. Investor also benefits if there is an ap

Explain the bird in the hand theory of cash dividends, Explain the bird in ...

Explain the bird in the hand theory of cash dividends. The bird in the hand dividends theory state that dividends received now are better than a promise of future dividends.  U

Total return analysis, A trade is assessed on the basis of its perfor...

A trade is assessed on the basis of its performance. Performance can be defined as the expected total return over and above the investment horizon of the trade. T

Outline the objectives of alm, You are a member of the ALM Committee (ALCO)...

You are a member of the ALM Committee (ALCO) of ANZ Bank. A visiting member has some queries relating to the general framework of the ALM and interest rate risk impact on the incom

State a process for benchmarking, State a process for benchmarking 1.  ...

State a process for benchmarking 1.  Gain senior management commitment to establish benchmarking as a process within the organisation and educate stakeholders and staff about t

Benefits of issue of securities, Benefits of Issue of Securities Initial...

Benefits of Issue of Securities Initial Public Offering (IPO) of securities gives instant recognition and visibility to the firm, helps to attract and retain skilled personnel,

Cash vs. accrual accounting, Cash vs. Accrual Accounting: While it is b...

Cash vs. Accrual Accounting: While it is beyond the scope of this module to assess accounting systems against all types of accounting styles, it is important that managers unde

Credit analysis- account receivable management, Credit analysis Assessm...

Credit analysis Assessment of creditworthiness depends on the examination of information relating to the new customer. This information is frequently generated by a third party

Exchange rate uncertainty affect firm exchange risk exposure, The exchange ...

The exchange rate uncertainty may not essentially mean that firms face exchange risk exposure. Describe why this may be the case. Answer:  A firm can comprise a natural hedging p

Write Your Message!

Captcha
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