You are considering investing $1000 in a T-bill that returns 5% and a risky portfolio, P,...

You are considering investing $1000 in a T-bill that returns 5% and a risky portfolio, P, constructed with 2 risky securities, X and Y. The weights of X and Y are 0.60 and 0.40 respectively. X has an expected rate of return of 0.14 and variance 0.01 and Y has an ex- pected rate of return of 0.10 and a variance of 0.0081. You want to form a portfolio with a standard deviation of return of 0.11, can you figure out with the information provided what percentages of your money must you invest in the T-bill and P, respectively?

Expert Solution

No we cannot figure out with the information given as correlation is misisng and we need correlation to find the standard deviation of risky portfolio P

jeff jeffy answered 2 years ago

You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P,...

You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with two risky securities, X and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081. If you want to form a portfolio with an expected rate of return of 0.11,...

You are considering investing $2,500 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y

You are considering investing $2,500 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in Pare 75% and 25% respectively. X has an expected rate of return of 18%, and Y has an expected rate of return of 14%. To form a complete portfolio with an expected rate of return of 8%, you should...

You are considering investing $10,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3.75% and a risky portfolio, P, constructed with two risky securities, X and Y.

You are considering investing $10,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3.75% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 32.7% and 67.3%, respectively. X has an expected rate of return of 8.5%, and Y has an expected rate of return of 13.8%. The dollar values of your positions in X, Y, and Treasury bills would be...

You invest 50% in a risky portfolio, and 50% in a treasury bill. The risky portfolio...

You invest 50% in a risky portfolio, and 50% in a treasury bill. The risky portfolio has an expected return of 15% and a standard deviation of 25%. The treasury bill pays 7%. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 30% Stock B 30% Stock C 30% Stock D 10%. a.) What are the investment proportions in the complete portfolio, including stock A, B, C, D and the Treasury bill? b.) What...

You invest 50% in a risky portfolio, and 50% in a treasury bill. The risky portfolio...

You invest 50% in a risky portfolio, and 50% in a treasury bill. The risky portfolio has an expected return of 15% and a standard deviation of 25%. The treasury bill pays 7%. Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 30% Stock B 30% Stock C 30% Stock D 10% What are the investment proportions in the complete portfolio, including stock A, B, C, D and the Treasury bill & What is...

You invest $98 in a risky asset and the T-bill. The risky asset has an expected...

You invest $98 in a risky asset and the T-bill. The risky asset has an expected rate of return of 18% and a standard deviation of 0.24, and a T-bill with a rate of return of 5%. A portfolio that has an expected outcome of $111 is formed by investing what dollar amount in the risky asset? Round your answer to the nearest cent (2 decimal places).

You manage a risky portfolio with expected rate of return of 7% and standard deviation of 15%. The T-bill rate is 4%.

You manage a risky portfolio with expected rate of return of 7% and standard deviation of 15%. The T-bill rate is 4%. (1) Your client chooses to invest 50% of a portfolio in your fund and 50% in a T-hill money market fund. What is the expected value and standard deviation of the rate of return on his portfolio? (2) Draw the CAL of your portfolio on an expected return-standard deviation diagram. What is the slope of the CAL? Show the position...

You are considering investing $1,400 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,400 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 18%, and Y has an expected rate of return of 14%. To form a complete portfolio with an expected rate of return of 9%, you...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 9.7%, you...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 2% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 40% and 60%, respectively. X has an expected rate of return of 0.10 and variance of 0.0081, and Y has an expected rate of return of 0.06 and a variance of 0.0036. The coefficient of correlation, rho,...

Question

You are considering investing $1000 in a T-bill that returns 5% and a risky portfolio, P,...

Solutions

Expert Solution

Related Solutions

You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P,...

You are considering investing $2,500 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y

You are considering investing $10,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3.75% and a risky portfolio, P, constructed with two risky securities, X and Y.

You invest 50% in a risky portfolio, and 50% in a treasury bill. The risky portfolio...

You invest 50% in a risky portfolio, and 50% in a treasury bill. The risky portfolio...

You invest $98 in a risky asset and the T-bill. The risky asset has an expected...

You manage a risky portfolio with expected rate of return of 7% and standard deviation of 15%. The T-bill rate is 4%.

You are considering investing $1,400 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...