2. Assuming the following: Average Return (Risky Portfolio) 3.86% Standard Dev (Risky Portfolio) 10.56% Average Risk Free Rate 2.18% Return on Risk Free Asset Avg 4.15% Using the formula: E(rc)=rf + y* (E(rp) - rf) Solve for: 1. % of Risky Assets (y): 2. % of Risk Free Assets (1-y): Note: You wish to generate a 7% return for your complete portfolio E(rc)
Q: Charles Wilson borrowed $15,550 from a bank for three years. If the quoted rate (APR) is 7.00…
A: The effective annual rate is the interest rate that an investment provides after the effects of…
Q: The present value of an ordinary annuity, PAN, is the value today that would be equivalent to the…
A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: e at the The net revenue at the end of year 2 is $4,000. The net revenue at the end of year 3 is…
A: Annual level revenue is that revenue which is equivalent to total revenue considering the time and…
Q: Ridge Clinic financial statements for 2018 and 2019 are presented below. Select the answers that…
A: Data given: December 31, 2018 Asset ($) 300000 Liabilities ($) 120000 Equity ($)…
Q: As a financial consultant, you are given the following information about two companies, one levered…
A: Concept. 1.Value of firm = net income ÷ cost of capital(WACC) 2. Value of firm = value of debt +…
Q: Tater and Pepper Corp. reported free cash flows for 2021 of $52.1 million and investment in…
A: Free cash flow = $52.1 million Investment in operating capital = $35.1 million Depreciation expenses…
Q: u decided to take a study abroad for the Spring 2023 semester. You decided to save $200 each month…
A: Future value of annuity includes the amount being deposited and amount of compounding interest being…
Q: Suppose you took out a 20 year mortgage for $280,000 with an APR of 2.772%, but you want to pay it…
A: A mortgage is a loan taken out to purchase or maintain a property. The loan is covered as the…
Q: nvestment in a project that will yield £100,000 after five years at a cost of capital of 8.0%. This…
A: The present value is equivalent value today based on the interest rate and period of investment of…
Q: Please answer question 2 & 3 after reading the scenario thank you. Question at the end Stephanie…
A: Dividend discount model with fixed growth in dividends With required rate of return (r), current…
Q: Kawesha Corporation has a premium bond making semiannual payments. The bond pays a 9 percent coupon,…
A: Information Provided: Kawesha Corporation Coupon rate = 9% Kawesha Corporation YTM rate = 7%…
Q: 25. Coug's Mart, a local supermarket, is considering an expansion project of adding a small deli…
A: Initial cash flow is expenses incurred for starting a project that is initial or first investment…
Q: Net foreign investment Net foreign investment and investment Investment National saving and…
A: Demand for loans depends on supply and need in the market. If demand is more interest rate tends to…
Q: Determine the risk-neutral value for a European put option (for a FLB (First Local Bank) share) that…
A: Given: Strike price = R500 Current price = R650 Interest rate = 11% Volatility = 0.026 Period = 8…
Q: A bond has a Current Yield of 10%. If the bond is paying a coupon Rate of 7%, for how much is the…
A: A Bond refers to a concept that is defined as an instrument that represents the loan being made by…
Q: (1) Established companies tend to grow their panel of banks over time to need its expanding banking…
A: We have two statements. We need to argue if they are individually true or false.
Q: Lassiter Industries has annual sales of $220,000 with 12,000 shares of stock outstanding. The firm…
A: Price earning Ratio - In simple words we can say how much money investor pay for the stock to earn…
Q: You deposit $2000 in an account that pays 7% interest compounded semiannually. After 2 years, the…
A: Initial deposit (P) = $2000 Semiannual interest rate for first 2 years (r1) = 0.035 (i.e. 0.07 / 2)…
Q: Question 8 What is the future value of a lump sum of $4,351 invested for 7 years at 5.4 percent…
A: Initial investment (I) = $4,351 Interest rate (r) = 0.054 Period (n) = 7 Years Future value = ?…
Q: trader submits a market to sell 900 shares. The buy limit orders standing in the stock's order book…
A: In the given case, Trader to sell 900 shares. Sell order can only be executed at the limit price or…
Q: .I need help with finance homework questions asap. (rounded to 2 decimal places) What is the…
A: The Effective annual rate is referred to the interest rate that is actually earned on an investment…
Q: A(n) a. inventory turnover ratio b. current ratio is useful in evaluating liquidity policies. c.…
A: Liquidity refers to the company's ability to determine how quickly it can convert the assets and use…
Q: 4) A project is predicted to have a return of -£16m in a recession, and the probability of a…
A: Expected Return - It is the return based on certain probability with possible outcome. It can be…
Q: Period 1: June 1, 2021, to June 7, 2021: On June 4, 2021, Hardcore LLC sold 20% of its 50% holding…
A: From June 1 - June 7 OTC i.e. Over The Counter transaction took place which is trading outside the…
Q: Use the following information to determine the value of a currency swap in US dollars. Under the…
A: A swap is an agreement between two counterparties in the financial world to exchange financial…
Q: You are short 3,500 shares of a $40 stock and based on its chart, you believe the shares could rise…
A: 1) We are short on the stock so we short sold the share at $ 40. To make profit, we have to buy the…
Q: An abnormal return occurs: Only when the actual return is lower than the expected return. Only…
A: A market is said to be efficient, if intrinsic Value of the Security is equal to Market price of the…
Q: he small happy Kingdom of Pollyanna does not trade with the rest of the world, but uses U.S dollars…
A: Tariff is a kind of levy or a tax. Here the import tariff is levied on the imports of tofu and the…
Q: A portfolio has 80 shares of Stock A that sell for $37 per share and 115 shares of Stock B that sell…
A: A portfolio refers to a collection of investments that are held by an investor. The portfolio weight…
Q: Suppose you have been requested to evaluate a solar farm investment in Warwick. The investment cost…
A: The Net Present Value and the Internal Rate of Return: The Net Present Value: The net present value…
Q: The project's discounted payback period is .years.
A: Information Provided: Cost of capital = 10% Year 0 CF = -$158,000 Year 1 CF = $27,000 Year 2 CF =…
Q: Gotterdammerung Corporation is a blue-chip company in the specialty chemicals industry. Rheingold…
A: We have a question here on market efficiency. We need to correlate the occurrence of the event and…
Q: Under a factory savings plan, a workman deposits P100.00 at the beginning of each month for 4 years,…
A: The simple rate of interest means the interest is determined on the principal amount, which means…
Q: New share price|NPV > announced] The market cap of the firm is $100 million (10 million shares at…
A: Market price per share = (Market Capitalization + Present value of cash flow)/ No of shares…
Q: u buy a house of $500,000 today. You put a down payment of 20% and borrow a fixed-rate mortgage of…
A: Mortgage loans are taken in the purchase of home and they are paid by equal monthly installments…
Q: Remember from class that YTM - Riskfree = sum of rilk premiums. Assume the risk-free rate is 1.924…
A: Risk free rate = 1.924 Credit risk premium = 1.260 Maturity perium = 1.218
Q: If a certain stock sells for 33.812 dollars on the NYSE, how much will it sell for, in dollars, on…
A: 1) If a Stock is listed at more than one stock exchange, then the price traded at all the stock…
Q: What are the expected return and standard deviation of your client's portfolio?
A: Given, expected rate of return of 19% standard deviation of 30% The T-bill rate is 4%.
Q: You are saving for a house, and you would like to invest your money for the next year to reach your…
A: Risks associated with financial assets can be reduced by using the hedging method. The danger of any…
Q: What is the Current Yield of a Bond selling at $1,120 and has a Coupon Rate of 7%? 7%…
A: Solution:- Current Yield means the percentage of coupon amount to the current market price of bond.…
Q: You are thinking of investing in Tikki's Torches, Inc. You have only the following information on…
A: Information Provided: Net Income = $600,000 Total debt = $13,000,000 Debt ratio = 40%
Q: A person borrows 10,000 at an interest rate of 8% per year and wishes to repay the loan over a…
A: As per the given information: The amount borrowed - 10,000 Interest rate - 8% per year Loan period -…
Q: What is the APR for a fed ra
A: APR means annual percentage rate. APR means the borrowing cost incurred by the borrower for a…
Q: The price you pay for a bond with a face value of $5000 sell-ing at 103 points is O a. $5,300 O b.…
A: Bond price is the market price of a bond. It is computed by discounting the future cash flows…
Q: A lottery winner is given the choice of receiving a lump sum amount of $450,000 or a monthly…
A: Given: The lumpsum amount of lottery is $450,000. The rate of return on investment is 12%. Compute…
Q: Stag Company will pay dividends of $9.6, $5.9, $9.7 and $10 for the next four years. Thereafter, the…
A: To Find: Current market price of the share
Q: Draw the Cash Flow Diagram for your car (or on of your family member's car). Assume the following:…
A: It indicates that core operations are bringing in revenue and that there is sufficient cash on hand…
Q: Eastpac Bank's balance sheet has the following information: Assets Duration Book Value Market Value…
A: Answer is 8. Please see screenshot in Next Step
2. Assuming the following:
Average Return (Risky Portfolio) | 3.86% |
Standard Dev (Risky Portfolio) | 10.56% |
Average Risk Free Rate | 2.18% |
4.15% |
Using the formula: E(rc)=rf + y* (E(rp) - rf)
Solve for:
1. % of Risky Assets (y):
2. % of Risk Free Assets (1-y):
Note: You wish to generate a 7% return for your complete portfolio E(rc)
Step by step
Solved in 4 steps
- Please help me answer this question in Excel Form 2. The risk-free rate is 4%, and the required return on the market is 12%. b. A portfolio invests 40% in the asset in (a) and the rest in a market portfolio. What is the required return on this portfolio? Thanks :)Calculate the expected return of portfolio and standard deviation of portfolio of 3 Assets (Security B, C, and D) (Hints: Assume that weights of B, C, and D are , respectively; the expected rate of return for Security B, C, and D is 9.9%, 1.2%, 7.3%, respectively)? Prob. Security A Security B Security C Security D Security E Recession 0.1 3.0% -29.5% 24.5% 3.5% -19.5% Below avg. 0.2 3.0% -9.5% 10.5% -16.5% -5.5% Average 0.4 3.0% 12.5% -1.0% 0.5% 7.5% Above avg. 0.2 3.0% 27.5% -5.0% 38.5% 22.5% Boom 0.1 3.0% 42.5% -20.0% 23.5% 35.5%Consider a position consisting of a K200,000 investment in Asset A and a K300,000 investment in Asset B. Assume that the daily volatilities of the assets are 1.5% and 1.8% respectively, and that the coefficient of correlation between their returns is 0.4. What is the five day 95% Value at Risk (VaR) for the portfolio (95% confidence level represents 1.65 standard deviations on the left side of a normal distribution)?
- Using the information provided in the pictures: Let’s assume, you want to construct a portfolio of risky and riskfreeassets. You wish to generate a 7% return for your complete portfolio E(rc). Using the Capital AllocationLine (CAL) equation - E(rc) = rf + y(E(Rp) - rf)a. Calculate the portion that you need to invest in risky assets and (b). in risk-free assets.c. Calculate the standard deviation of the portfolio.2) A risky portfolio is provided with an expected rate of return of 19.5%, standard deviation of 30% and risk free rate of 8.5%. If the client chooses to invest three different risky assets a proportion of equal investments and also in T bills. a) Determine weights of all the distributed assets. b) Determine the Sharpe ratio of the portfolio c) If the investment is done such a way that the expected return is maximized with standard deviation not exceeding 25%. Determine the investment proportion and expected return of the portfolio.You are evaluating various investment opportunities currently available and you have calculated expected returns and standard deviations for five different well-diversified portfolios of risky assets. PORTFOLIO EXPECTED RETURN STANDARD DEVIATION Q 7.8% 10.5% R 10.0% 14.0% S 4.6% 5.0% T 11.7% 18.5% U 6.2% 7.5% a) For each portfolio, calculate the risk premium per unit of risk that you expect to receive [(E(R) –RFR)/ơ]. Assume that the risk free rate is 3.0%. b) Using…
- Asset Y has a beta of 1.2. The risk-free rate of return is 6 percent, while the return on the market portfolio of assets is 12 percent. The asset's market risk premium isa) Consider two assets with the following characteristics: Expected return of asset 1 = 0.15, Standard deviation of asset 1 = 0.10, portion in asset 1 = 0.5 Expected return of asset 2 = 0.20, Standard deviation of asset 2 = 0.20, Compute the expected return and standard deviation of portfolio if correlation coefficient (r1,2) = 0.40 and (r1,2)= -0.60 b) Why do most investors hold diversified portfolio?Portfolio consists of two independent risky assets AA and BB with expected returns 4\%4% and 5\%5% and standard deviations 2\%2% and 6\%6%. Share of asset AA is 60\%60% Standard deviation of the portfolio return is:
- Consider following information on a risky portfolio, risk-free asset and the market index. What is the T2 of the risky portfolio? Risky portfolio Risk-free asset Market index Average return 8.2% 2% 6% Std. Dev. 26% 20% Residual std. dev. 10% Alpha 1.4% Beta 1.2The beta on risky asset A is 1.8 and the beta on risky asset B is 1.1. The expected return on the market portfolio is 10% and the risk free rate of return is 4%. Consider a portfolio comprising the two risky assets and the risk-free asset where you invest 50% in risky asset A and 30% in risky asset B. What is (i) the beta of a portfolio and (ii) the expected return of the portfolio? a None of the above b (i) 0.97 and (ii) 9.82% c (i) 1.23 and (ii) 9.82% d (i) 1.23 and (ii) 11.38% e (i) 0.97 and (ii) 11.38%assume that risk free rate, RF, is currently 8%, the market return, 1m, is 12%, and asset a beta ba, is 1.10. (a) Draw the SML on a set of "non-diversifiable risk Please sent me complete this question for further reliance.