Question
In: Finance
Assume you manage a risky portfolio with an expected rate of return of 12% and a...
Assume you manage a risky portfolio with an expected rate of return of 12% and a standard deviation of 21%. The T-bill rate is 3%. Your client decides to invest in your risky portfolio a proportion (y) of her total investment budget so that her overall portfolio will have an expected rate of return of 8%. What is the proportion of y? Convert your answer to percentages with two decimal points
Solutions
Expert Solution
Expected rate of return =8%
Weight of Risky Portfolio*Return of Risky Portfolio + weight of
Risk free Asset*Return of Risk free asset
8% =y*12%+(1-y)*3%
Proportion of Y=(8%-3%)/(12%-3%) =55.56%
jeff jeffy answered 2 years agoRelated Solutions
Assume that you manage a risky portfolio with an expected rate of return of 12% and...
Assume that you manage a risky portfolio with an expected rate
of return of 12% and a standard deviation of 44%. The T-bill rate
is 5%.
Your client chooses to invest 80% of a portfolio in your fund
and 20% in a T-bill money market fund.
What is the expected return of your client's portfolio?
(Enter your answer as a decimal number rounded to four
decimal places.)
Expected return?
Assume you manage a risky portfolio with an expected rate of return of 12% and a...
Assume you manage a risky portfolio with an expected rate of
return of 12% and a standard deviation of 21%. The T-bill rate is
3%. Your client decides to invest in your risky portfolio a
proportion (y) of her total investment budget so that her overall
portfolio will have an expected rate of return of 8%. What is the
standard deviation of the rate of return on your client's
portfolio? Convert your answer to percentages with two decimal
points
Assume that you manage a risky portfolio with an expected rate of return of 12% and...
Assume that you manage a risky portfolio with an expected rate
of return of 12% and a standard deviation of 28%. The T-bill rate
is 4%. Your client chooses to invest 80% of a portfolio in your
fund and 20% 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.)
b. Suppose your risky portfolio includes the
following investments in the given proportions:
Stock...
Assume that you manage a risky portfolio with an expected rate of return of 12% and...
Assume that you manage a risky portfolio with an expected rate
of return of 12% and a standard deviation of 47%. The T-bill rate
is 4%.
Your risky portfolio includes the following investments in the
given proportions:
Stock A
31
%
Stock B
31
%
Stock C
38
%
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...
Assume that you manage a risky portfolio with an expected rate of return of 12% and...
Assume that you manage a risky portfolio with an expected rate
of return of 12% and a standard deviation of 44%. The T-bill rate
is 5%. Your client chooses to invest 80% of a portfolio in your
fund and 20% in a T-bill money market fund.
a.
What is the expected return and standard deviation of your
client's portfolio? (Enter your answer as a percentage
rounded to two decimal places.)
Expected return
% per year
Standard deviation
% per year...
Assume that you manage a risky portfolio with an expected rate of return of 17% and...
Assume that you manage a risky portfolio with an expected rate
of return of 17% and a standard deviation of 27%. The T-bill rate
is 7%. Your client chooses to invest 70% of a portfolio in your
fund and 30% in a T-bill money market fund.
QUESTION 12 What is the Sharpe ratio of your risky portfolio? A.
27% B. 37% C. 19.32% D. 62.9% E. 17.58% 4 points
QUESTION 13 What is the Sharpe ratio of your overall portfolio?...
Assume that you manage a risky portfolio with an expected rate of return of 17% and...
Assume that you manage a risky portfolio with an expected rate
of return of 17% and a standard deviation of 35%. The T-bill rate
is 4.5%.
A client prefers to invest in your portfolio a proportion
(y) that maximizes the expected return on the overall
portfolio subject to the constraint that the overall portfolio's
standard deviation will not exceed 25%.
What is the expected rate of return on your client's overall
portfolio?
Expected rate of return?
Assume you manage a risky portfolio with an expected rate of return of 8% and a...
Assume you manage a risky portfolio with an expected rate of
return of 8% and a standard deviation of 18%. The T-bill rate is
3%. Suppose your client prefers to invest in your portfolio a
proportion that maximizes the expected return of the overall
portfolio subject to the constraint that the overall portfolio's
standard deviation will note exceed 12%. What is the expected
return of the overall portfolio? convert your answer to percentages
and round to two decimal places
Assume that you manage a risky portfolio with an expected rate of return of 17% and...
Assume that you manage a risky portfolio with an expected rate
of return of 17% and a standard deviation of 33%. The T-bill rate
is 6%. Your client chooses to invest 75% of a portfolio in your
fund and 25% 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...
Assume that you manage a risky portfolio with an expected rate of return of 15% and...
Assume that you manage a risky portfolio with an expected rate
of return of 15% and a variance of 20%. The risk-free rate is
7%.
a) Draw capital allocation line considering the scenario: (i)
y=0, (ii) y=1 and (iii)
y=1.50; where, y is proportions of your investment in risky
assets.
b) Your client chooses to invest $15,000 in your fund and $5,000
in risk-free asset.
What is the reward-to-variability ratio of your client’s overall
portfolio?
c) Suppose this client decides...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The Blossom Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a...
- Please answer all 4 parts of this question John Johnson just received a cash gift from...
- Question #1 C4H10O with a butanol combustion cycle (formation enthalpy-332,000 kJ / kmol) 25 per cent...
- Suppose a survey revealed that 19% of 494 respondents said they had in the past sold...
- Topic: Choose a company which are you are starting, and a main product or service that...
- 4. Why did the United States and the Soviet Union find themselves in a “Cold War”...
- The Facts: Ann and Bill decided to start a coffee shop. They agreed Bill would provide...
ADVERTISEMENT