Bob is your clients and you advise him in his portfolio selections and investment decisions. According...

Bob is your clients and you advise him in his portfolio selections and investment decisions. According to your analysis, Bob has a degree of risk aversion of 3.1. The risk-free rate is currently 2%, the expected return on the market portfolio is 8.7%, and the volatility of the market portfolio is 19%.

Advise Bob on his optimal capital allocation by giving the weight (in percentage) to put in the risky market portfolio.

{Give your answer as a percentage with 2 decimals, e.g., if the result of your calculations is 0.345224 (or 34.5224%) , enter 34.52 as your answer.}

Solutions

Expert Solution

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

You are the manager of an investment fund. Your job is to advise clients on what...

You are the manager of an investment fund. Your job is to advise clients on what portfolio best suits their needs, given their characteristics. You have four different client types. I. A 23 year old woman (Vanessa), who has just begun a long and hopefully successful career as a nurse. II. A couple (Eddy and Eliza), both 41 years of age and have two young children. Both earn high incomes and wish to retire at the age of 60. III....

You have been approached by one of your clients to give him an investment advice regarding...

You have been approached by one of your clients to give him an investment advice regarding his investment portfolios. He has divided equally his RM500k into two investment portfolios: A and B for five (5) years period. The expected future net cash flows are given in percentage as shown in the table below. Year Investment A (RM) Investment B (RM) 0 Initial Capital (250,000) Initial Capital (250,000) 1 40% 42% 2 32% 34% 3 28% 16% 4 16% 24% 5...

An investor is considering investing into a mutual fund. Before taking his decision you advise him...

An investor is considering investing into a mutual fund. Before taking his decision you advise him to not only take into account returns but also fees charged by the mutual fund. a) For each of the following options, calculate the amount available after 20 years assuming that the investor reinvests all distributions. All funds considered generate a 10% annual return throughout the period and the amount invested annually is always $3000 Option 1: The fund charges no fees on entry...

Bob wants to sell his deceased father's classic car. His fatherhad told him numerous times...

Bob wants to sell his deceased father's classic car. His father had told him numerous times the engine was all original. Bob knows very little about car engines and has no reason to doubt what his father told him. He lists the car for sale for $50,000 and justifies the price because the engine is all original. If later that turns out not be the case and the buyer sues, what state of mind will the court likely find Bob...

Billy Bob just purchased an investment that will pay him $10,000, $20,000 and $12,000 over the...

Billy Bob just purchased an investment that will pay him $10,000, $20,000 and $12,000 over the next three years, respectively. If Billy Bob expects to earn 12% compounded annually, how much did he pay for his investment? Please show work.

You work for a Realtor agency and part of the agency's job is to advise clients...

You work for a Realtor agency and part of the agency's job is to advise clients on the asking price. Based on your experience you know that buyers tend to focus on the size of the house, the number of bedrooms, number of bathrooms, and the age of house. You take a sample from the hundreds of houses that the agency sold over the past six months and plan to run a regression analysis in order to find out which...

5. Bob owns a building that was taken away from him by New York State. His...

5. Bob owns a building that was taken away from him by New York State. His basis in the building was $150,000 and he received $750,000 from the State. He bought a new building, later that year for $1,000,000. How much gain, if any, does Bob have to recognize for tax purposes? 6. Same facts as 5, except Bob sold the building to Joe. What are the tax results? If there is a difference, why did Congress allow for different...

Question