Question
In: Finance
Assume that you manage a risky portfolio with an expected rate of return of 14% and...
|
Assume that you manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 46%. The T-bill rate is 4%. Your client chooses to invest 85% of a portfolio in your fund and 15% in a T-bill money market fund. |
| a. |
What is the expected return and standard deviation of your client's portfolio? (Round your answers to 2 decimal places.) |
| Expected return | % per year | |
| Standard deviation | % per year | |
| b. |
Suppose your risky portfolio includes the following investments in the given proportions: |
| Stock A | 30% |
| Stock B |
30% |
| Stock C | 40% |
|
What are the investment proportions of your client’s overall portfolio, including the position in T-bills? (Round your answers to 2 decimal places.) |
| Security | Investment Proportions |
|
| T-Bills | % | |
| Stock A | % | |
| Stock B | % | |
| Stock C | % | |
| c. |
What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? (Round your answers to 4 decimal places.) |
| Reward-to-Volatility Ratio | |
| Risky portfolio | |
| Client’s overall portfolio | |
Solutions
jeff jeffy answered 8 months agoRelated Solutions
Assume that you manage a risky portfolio with an expected rate of return of 14% and...
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