Question

Asked Nov 3, 2019

36 views

An investor has a portfolio of two securities, a stock with a beta of 1.24 and a risk-free asset. The stock has an expected return of 13.68% and the risk-free asset has an expected return of 2.80%. The portfolio beta is 0.65. What rate of return should the investor expect to earn on her portfolio?

Group of answer choices

8.50%

9.16%

9.33%

9.41%

Step 1

Suppose the weight of the stock in the portfolio be x, then the weight of the risk free asset in the portfolio will be 1-x.

Step 2

Step 3

The beta of a risk free asset will be zero.

Given that portfolio beta is 0...

Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: Questions are on image

A: (1)Computation of closing stock and cost of goods sold is as follows:Calculation:Therefore, the valu...

Q: New parents wish to save for their newborn's education and wish to have $46,000 at the end of 17 yea...

A: Computation of yearly payment:Hence, the yearly payment is -$1,682.02.

Q: I am currently working on some practice problems for finance and need help setting them up as well a...

A: Hi, As per Q&A guidelines, we should answer the first question when multiple questions posted in...

Q: In a strong-form efficient market, accounting announcements: will impact stock price only if it ...

A: Stock price can be defined as the monetary value of a stock at which the stock is traded in the mark...

Q: At age 18, Susan did nothing. She waited until she was 28 to start depositing $2000 per year at the ...

A: Annuity, A = $ 2,000Interest rate, r = 12%Number of annuities = n = 65 - 28 = 37

Q: For technical analysis, based on patterns of historical prices, to have value, ______ form of market...

A: Weak form efficiency market hypothesis is an element of efficient market hypothesis which states tha...

Q: 7 Bond A's is a 15 year bond with current price is $933 and it has an $80 annual coupon. Bond B's is...

A: a) Bond A has an annual coupon of $80, current price $933 and 15 years to maturity.Yield to maturity...

Q: (Future value) Sales of a new finance book were 15,000 copies this year and were expected to increas...

A: Sales this year = S0 = 15,000 copiesAnnual growth rate in sales = g = 20%

Q: I NEED PART 4 and MULTIPLE CHOICE PLEASE (BOLD PARTS AT THE END) Part 1: The CFO of Cruz, inc. is co...

A: PART 4Assumption:The computation of MIRR is based on the WACC rate at 12%