According to Mr. Santos' calculations, he should invest the same amount in an asset with a risk-free interest rate of 4% and in a stock with an expected return of sixteen percent and a standard deviation of 18 percent. Estimate the expected return on the portfolio. 12% O 9% O 4% O 10%
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- Your client has decided that the risk of the bond portfolio is acceptable and wishes to leave it as it is. Now your client has asked you to use historical returns to estimate the standard deviation of Blandy’s stock returns. (Note: Many analysts use 4 to 5 years of monthly returns to estimate risk, and many use 52 weeks of weekly returns; some even use a year or less of daily returns. For the sake of simplicity, use Blandy’s 10 annual returns.)If you invest 70 percent your savings (out of a total of 100 percent) in a secutity with 13 percent expected return and a standard deviation of 16 percent and invest all of the remaining percentage of your savings in a security with 18 percent expected return and a standard deviation of 23 percent, what is the standard deviation of returns in percentage from his portfolio of two securities (to two decimal places)? Assume that the risk free rate of return is 5 percent and the correlation between the two securities is -0.0. (Your answer should be entered as a number and not after dividing by 100. So if the answer comes out to be, say, 2 percent, your should enter 2.00 and not 0.02)An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.14 and a standard deviation of .35 and 70 percent in a T-bill that pays 3 percent. His portfolio's expected return and standard deviation are __________ and __________, respectively. Please show the formula
- You invest 70% of your funds in stock X with an expected return of 16% and a standard deviation of returns of 20%, and 30% of your fund in a risk-free asset with an interest rate of 4%; calculate the expected return on the resulting portfolio:Your employer has asked you to investigate the firm’s portfolio risk and return. The portfolio comprises three stocks. It is invested 50 percent in stock A, 30 percent in stock B and 20 percent in stock C. You gathered the following information: a) Determine what is the portfolio’s expected return b) Determine the portfolio’s variance and standard deviation c) Assume that the expected risk-free rate is 2.75 percent. Determine the expected risk premium on the portfolio.A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7 percent and a standard deviation of 10 percent.The risk-free rate is 4 percent, and the expected return on the market portfolio is 12 percent. Assume the capital asset pricing model holds. Compute and justify the expected rate of return would a security earn if it had a 0.45 correlation with the market portfolio and a standard deviation of 55 percent.
- Your employer has asked you to investigate the firm’s portfolio risk and return. The portfolio comprises three stocks. It is invested 50 percent in stock A, 30 percent in stock B and 20 percent in stock C. (a) Determine what is the portfolio’s expected return. (b) Determine the portfolio’s variance and standard deviation. (c) Assume that the expected risk-free rate is 2.75 percent. Determine the expected risk premium on the portfolio.Assume that you have just received information from your investment advisor that your portfolio has reached a value of $1,250,000. Your portfolio consists of three stocks, as follows: Stock Amount Invested % of Total Beta A $250,000 20% 1.12 B $400,000 32% .85 C $600,000 48% .55 Total: $1,250,000 100% Calculate the beta of this investment portfolio. Assume that the expected market return ( r m ) is 9 percent and the expected risk- free rate ( RF ) is 2 percent. What is the expected return ( r j ) for this investment portfolio?You invest 80% of your portfolio in a risky portfolio that has an expected rate of return of 15% and a standard deviation of 21%, and the rest in T-bill with a 2% rate. What is the expected return of your portfolio? Enter your answer as a decimal number, rounded to three decimal places.
- Your employer has asked you to investigate the firm’s portfolio risk and return. The portfolio comprises three stocks. It is invested 50 percent in stock A, 30 percent in stock B and 20 percent in stock C. Please show your workings carefully. You gathered the following information: (a) Determine what is the portfolio’s expected return.(b) Determine the portfolio’s variance and standard deviation. (c) Assume that the expected risk-free rate is 2.75 percent. Determine the expected risk premium on the portfolio.You form a complete portfolio by investing 30% of your portfolio in a risky portfolio that has an expected rate of return of 9% and a standard deviation of 19%, and the rest in T-bill with a 2% rate. What is the standard deviation of your complete portfolio? Enter your answer as a decimal number, rounded to three decimal places.You are considering investing in a combination of a stock and a risk-free asset. The stock has an expected return of 17% with a standard deviation of 11% and the riskfree return is 3%. (a) Complete the table below and plot the expected portfolio return as a function of the portfolio standard deviation. (b) Suppose you are investing £1000. What is the meaning of a portfolio invested 150% in the risky asset?
