Aasir can invest his money in risk-free asset and/or in a fund F. The risk-free asset...

Aasir can invest his money in risk-free asset and/or in a fund F. The risk-free asset provides a guaranteed return of 4%. The fund F provides expected return of 12% with

volatility of 25%. If Aasir wants to limit his risk to no more than 20%, what is the highest expected return he can earn? If Aasir wants an expected return of at least 16%, what is the

minimum possible volatility of his portfolio?

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 5 months ago

You invest all your money into a risky asset and a risk-free asset. The risky asset...

You invest all your money into a risky asset and a risk-free asset. The risky asset has an expected return of 0.065 and a standard deviation of 0.25, the risk-free asset returns 0.025. What is the return on your combined portfolio if you invest 0.4 in the risky asset, and the remainder in the risk-free asset? Round your answer to the fourth decimal point.

An investor wants to invest his money in a fund that has maintained a steady value....

An investor wants to invest his money in a fund that has maintained a steady value. A fund manager claims that one of his bond funds has maintained an average price of $18.00 with a variance of 0.1. In order to find out if the fund manager's claim is true, the investor samples the prices from 15 random days and finds a standard deviation of 0.2813 in the price. Can the investor conclude that the variance of the share price...

Investor B maximizes his utility function by investing 40% of his wealth in the risk-free asset. What fraction of his wealth does investor B invest in X?

Consider an economy consisting of two stocks (X and Y) and a risk-free asset. Investor A maximizes his utility function by investing 10% of his wealth in the risk-free asset, 75% in X, and 15% in Y. Investor B maximizes his utility function by investing 40% of his wealth in the risk-free asset. What fraction of his wealth does investor B invest in X?

An investor wants to invest his money in a fund which has maintained a steady value....

An investor wants to invest his money in a fund which has maintained a steady value. A fund manager claims that one of his bond funds has maintained an average price of $⁢19.00 with a variance of 0.2. In order to find out if the fund manager's claim is true, the investor samples the prices from 22 random days and finds a standard deviation of 0.0947 in the price. Can the investor conclude that the variance of the share price...

An investor can borrow or invest at a risk-free rate of 4%. The investor is a...

An investor can borrow or invest at a risk-free rate of 4%. The investor is a mean-variance utility maximize with a risk aversion coefficient A = 4. What is the expected return on an optimal allocation between the risk-free security and a risky portfolio with an expected return of 10% and a volatility of 20%?

Your client would like to invest $15,000 in both the risk-free asset with return of rf...

Your client would like to invest $15,000 in both the risk-free asset with return of rf = 1% and the risky portfolio with expected return of μm = 8% and standard deviation of σm = 25%. Her utility function is U(μ,σ)=μ−ασ2, where her risk aversion is 1.5. a.How much should you invest in the risky portfolio so that she can receive the greatest utility? b. What is the expected return of this optimal portfolio? c. What is the standard deviation...

Your client chooses to invest 40% in your portfolio (p) and 60% (f) in the risk-free asset. What is the standard deviation of your client’s portfolio?

You are a manager of a risky portfolio (consists of bonds and stocks) with an expected return E(rp) = 8% and standard deviation stdevp = 12%. The risk free rate rf = 2% and the standard deviation of the risk free asset is stdevf = 0% 7. Your client chooses to invest 40% in your portfolio (p) and 60% (f) in the risk-free asset. What is the expected return?1. Your client chooses to invest 40% in your portfolio (p) and...

Consider the following capital market: a risk-free asset yielding 2.25% per year and a mutual fund...

Consider the following capital market: a risk-free asset yielding 2.25% per year and a mutual fund consisting of 80% stocks and 20% bonds. The expected return on stocks is 13.25% per year and the expected return on bonds is 3.95% per year. The standard deviation of stock returns is 40.00% and the standard deviation of bond returns 14.00%. The stock, bond and risk-free returns are all uncorrelated. The expected return on the mutual fund. =(13.25*.8)+(3.95*.2) Using the data from problem...

In a portfolio consisting of the risk free asset and/or a risky asset, what is the...

In a portfolio consisting of the risk free asset and/or a risky asset, what is the expected return and standard deviation if you borrow 25% of your net worth by selling short the risk free asset and invest the proceeds in the risky asset, given the following? Rm = .15 Rf = .05 σm = .2

17. A portfolio consists 20% of a risk-free asset and 80% of a stock. The risk-free...

17. A portfolio consists 20% of a risk-free asset and 80% of a stock. The risk-free return is 4%. The stock has an expected return of 15% and a standard deviation of 30%. What’s the expected return A. 12.8% B. 9.5% C. 15.0% D. 4.0% 18. The stock of Alpha Company has an expected return of 0.10 and a standard deviation of 0.25. The stock of Gamma Company has an expected return of 0.16 and a standard deviation of 0.40....

Question