Question
In: Finance
4.Jane wants to create a $10,000 portfolio. She also wants to invest as much as possible...
4.Jane wants to create a $10,000 portfolio. She also wants to
invest as much as possible in a high risk stock with the hope of
earning a high rate of return. However, she wants her portfolio to
have no more risk than the overall market. Which one of the
following portfolios is most apt to meet all of her
objectives?
A.Invest the entire $ 10,000 in a stock with a beta of
1.0
B.Invest $5,000 in a stock with a beta of 1.98 and S5,000 in a
stock with a beta of 1.0
C.Invest $5,000in a stock with a beta of 1.0, $2,500 in a
risk-free asset, and $2,500 in a stock with a beta of 2.0
D.I nvest $5,000 in a risk-free asset and $5,000 in a stock
with a beta of 2.0
E.Invest S4,000 in a stock with a beta of 3, $4,000 in a
risk-free asset, and $2,000 in a stock with a beta of
1.0
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Helen wants to buy a used $10,000 car in 4 years. How much must she save...
Helen wants to buy a used $10,000 car in 4 years. How much must
she save per week, earning 7.5% annual interest to have the
$10,000?
You decided to invest your wealth of $10,000 in a portfolio of three stocks. You also...
You decided to invest your wealth of $10,000 in a portfolio of
three stocks. You also decided to sell stock 1 short and collect
$3,000. After the short sale you will invest $8,000 of your cash in
stock 2 and the remainder in stock 3. The expected rate of return
of stock 2 is R2 = 18% and of stock 3 is R3 =
22%. What should the rate of return on stock 1 be for the portfolio
rate of...
You want to create a portfolio as risky as the market with $500,000 to invest. Fill...
You want to create a
portfolio as risky as the market with $500,000 to invest. Fill in
the following table:
Asset
Investment BETA
stock
A $85,000
0.8
stock B
$165,000 1.15
stock C
---------- 1.4
Riskfree asset _______
------
Please fill in the
blanks and show all work
A person wants to invest $10,000 into stocks: a high tech company (T) with an expected...
A person wants to invest $10,000 into stocks: a high tech
company (T) with an expected annual return of 12% and a risk index
of 8; and a regulated power company (P) with an expected annual
return of 6% and a risk index of 2. To limit risk, the combined
portfolio risk must be no more than 6 and the proportion of
investment in T must be less than 60%. Find the portfolio that will
maximize the annual return R...
A person wants to invest $10,000 into stocks: a high tech company (T) with an expected...
A person wants to invest $10,000 into stocks: a high tech
company (T) with an expected annual return of 12% and a risk index
of 8; and a regulated power company (P) with an expected annual
return of 6% and a risk index of 2. To limit risk, the combined
portfolio risk must be no more than 6 and the proportion of
investment in T must be less than 60%. Find the portfolio that will
maximize the annual return R...
marry told you that she has $10,000 and wants to make an investment. However, she does...
marry told you that she has $10,000 and wants to make an
investment. However, she does not know which security to purchase.
You have decided to give her three alternatives: corporate bond,
preferred stock and common stock:
Corporate Bond of Trusted Bank (par value $1000, interest
payments 6.35%, maturity 5 years, market price $1020, required rate
of return 5%);
Preferred Stock of Best Equipment, Inc. (dividend $2.63, market
price $26.25, required rate of return 8%);
Common Stock of Great Resorts,...
Your grandfather gives your $10,000 to invest and you must invest every penny. He wants you...
Your grandfather gives your $10,000 to invest and you must
invest every penny. He wants you to have an expected return of
12.40% for your portfolio. You can chose between stock J with an
expected return of 13% and stock L with an expected return of
8%.
How much should you invest in stock J to achieve these
results?
Is it possible for a monkey to create a 10-year portfolio return that exceeds the market...
Is it possible for a monkey to create a 10-year portfolio return
that exceeds the market rate of return? Explain.
Is a portfolio return in excess of the market rate a signal of
successful portfolio management? Explain.
Consider two portfolios. One portfolio consists of a $10,000 investment in AAPL, and the other also...
Consider two portfolios. One portfolio consists of a $10,000
investment in AAPL, and the other also consists of a $10,000
investment in AAPL, but with 50% leverage ($5,000 of the investor's
capital, $5,000 borrowed). Now consider two separate moves in the
value of AAPL; a 10% upside return and a 10% downside return.
Explain the effect of leverage on the volatility and return by
comparing the performance of each portfolio.
How much should you invest in Y so that your portfolio will have a risk of...
How much should you invest in Y so that your portfolio will have
a risk of 13%, given the following:
X
Y
E[r]
8%
18%
St.Dev
10%
20%
The correlation between the returns of the two assets is 0.
Answer in decimal form and, if you have two answers report the
one that will produce the higher expected returns.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Read at least 2 academically reviewed articles and Write an annotated bibliography paper on Master Budgeting
- Why normalization and referential integrity are important principles when designing relational databases?
- Respond to the following in a minimum of 175 words: Discuss what elements should be present...
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
- A solar cell generates a potential difference of 0.320 V when a 445.0 ? resistor is...
- A ceiling fan consists of a small cylindrical disk with 5 thin rods coming from the...
- You measure the following quantities as A = 1.0 m ± 0.2 m, B = 2.0...
ADVERTISEMENT