Drew can design a risky portfolio based on two risky assets, Origami and Gamiori. Origami has an expected return of 13% and a standard deviation of 20%. Gamiori has an expected return of 6% and a standard deviation of 10%. The correlation coefficient between the returns of Origami and Gamiori is 0.30. The risk-free rate of return is 2%. What is the Sharpe ratio of the optimal risky portfolio? Group of answer choices 47.78% 60.26% 12.19% 9.34%
Q: Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $189,000…
A: Net Present Value: NPV is calculated as the difference between the present value of cash inflow and…
Q: What is the SML? What is the CAPM? What is the APT?
A: Security Market Line (SML):The Security Market Line (SML) is a graphical representation of the…
Q: EMA's 2022 sales were $10 million. If sales grow at 5% per year, how large will they be 5 years…
A: Future value is the estimation of future cash value which is likely to be received in the future…
Q: PV of Cash flows for the next 6 years as follows (1500,2000,2500,3000,3500,4000) at 8.8% discount…
A: The present value represents current expected value of the future stream of cash flows. It is…
Q: What would you have to do to increase the value of your Company's stock without distributing…
A: To increase the value of a company's stock without distributing dividends for an extended period,…
Q: Jimmy Shoes Inc. has 10,000 shares outstanding with a stock price of $40 per share. The current…
A: The debt-to-equity ratio (D/E ratio) refers to the ratio of debt available as compared to the…
Q: A-b-o-u-t- -t-h-e- -t-o-p-i-c- -o-f- -m-a-n-a-g-i-n-g- -c-r-e-d-i-t- -c-a-r-d-s-,- -a-n-d-…
A: Managing credit cards and insurance, including life, health, and property insurance, is an important…
Q: Quail Company is considering buying a food truck that will yield net cash inflows of $13,800 per…
A: Annual net cash inflows = $13,800Initial investment = $40,000 Salvage value = $6,300 Required return…
Q: Suppose you are the manager of a bank that has $15 million of fixed-rate assets, $30 million. of…
A: Fixed-rate assets = $15 million Rate-sensitive assets = $30 million Fixed-rate liabilities = $25…
Q: two stocks, A and B, are perfectly correlated. Stock A has an expected return of 0.15 and a…
A: Expected return volatility means that risk which is involved in earning the return from the stock.…
Q: Mr. Lucky just won the lottery. He has a choice of $1,000,000 today or a $50,000 semi-annual payment…
A: The concept of time value of money will be used here.Amount today is the present value and…
Q: Use the following interest rate assumptions: U.S. = 5.5% Euro = 7.5% If a U.S. firm borrows in…
A: The difference in interest rates in the USA and EU affects the exchange rate between the US dollar…
Q: You want to retire in 30 years, and you want to have an annuity of $45,000 a year for 25 years after…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: A trader sells a call and buys a put on the same underlying assets with the same strike price and…
A: The call option refers to the derivative instrument that provides its holder the choice of…
Q: Suppose you create a minimum-variance portfolio by combining two perfectly negatively correlated…
A: A minimum variance portfolio is the portfolio that gives lowest possible risk for a given…
Q: Tresnan Brothers is expected to pay a $3.30 per share dividend at the end of the year (.e, D,-…
A: The current stock value is calculated as the discounted value of future dividends using the Dividend…
Q: Use the information for the question(s) below. Omicron Industries Market Value Balance Sheet 5…
A: Debt capacity represents a measure of the amount of debt that is provided to the business by the…
Q: LBM Company just paid a $1.23 annual dividend. You noticed that the firm paid an annual dividend of…
A: Growth rate = (Dividendn/ Dividend0)^(1/n)-1 =(1.23/0.91)^(1/10)-1 = 0.03059…
Q: Using the simple interest formula I-Prt, state the rate and time required for the formula in decimal…
A:
Q: Sprint Shoes Incorporated had a beginning inventory of 9,700 units on January 1, 20X1. The costs…
A: Since Sprint Shoes uses LIFO method, 43,900 units from current year production and 3,630 units from…
Q: Risk-Adjusted Performance Measures Sharpe Ratio Treynor's Measure Information Ratio A 0.4750 -0.0082…
A: Risk adjusted measures are used to determine the reward an investor would get for taking that amount…
Q: 3) Long-term customer relationships easier to credit risks. A) reduce; screen B) increase; screen C)…
A: The relationship between long-term customer relationships and credit risks is an important…
Q: An investment of $4000 earned interest quarterly. If the balance after 6.5 years was $6000, what…
A: The concept of TVM states that money has an interest-earning capacity which makes money received…
Q: Compute the duration of an 8%, 5-year corporate bond with a par value of $1,000 and yield to…
A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…
Q: a) In each of the theories of capital structure the cost of equity rises as the amount of debt…
A: The relationship between the cost of equity and the amount of debt in a company's capital structure…
Q: WHAT IS THE FINANCIAL SYSTEMS' APPROACH TO MICROFINANCE?
A: The financial systems' approach to microfinance focuses on viewing microfinance as an integral part…
Q: A back load fund has initial load of 5% and it will decline by 1% each year after the initial…
A: Mutual funds are traded with entry or Exit load fee which is charged by the houses to provide the…
Q: You sold short 200 shares of common stock at $60 per share. The initial margin is 65%. What would…
A: Number of shares sold=200Sale price per share=$60Repurchase price per share=$80Initial…
Q: Problem 2-10 Statement of Cash Flows (LG2-4) Usher Sports Shop had cash flows from investing…
A: Cash flows from investing activities = -$4,374,000Cash flows from financing activities =…
Q: Jaime has saved $200.00 to buy a new bike. The bike he wants has a regular price of $289.00,…
A: There is markup and mark down on the sale price so as to increase and decrease the price of the…
Q: I need the manual formula as well as the excel function please. F. PV of Cash flows for the next 6…
A: The present value represents current expected value of the future stream of cash flows. It is…
Q: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to…
A: Capital budgeting refers to the process of evaluating and selecting long-term investment projects or…
Q: A bond with 14 years to maturity and a coupon rate of 5% has a par, or face, value of $19,000.…
A: A bond is a kind of debt security issued by the government and private companies for raising funds…
Q: A recently installed machine earns the company revenue at a continuous rate of 60,000r +45,000…
A: Present value is the value of all future cash flows being discounted at an interest rate for a…
Q: Find out how sensitive the investment decision of this investment alternative is to its revenues.…
A: First we are going to determine the PV of cash flows by inputting the following values in a…
Q: Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at…
A: The weight of debt refers to the proportion or percentage of a company's total capital structure…
Q: Give only typing answer with explanation and conclusion Tim’s corp has 10 million shares of common…
A: Weighted Average cost of capital is determined by adding weighted cost of capital from different…
Q: WHAT IS MICROFINANCE?
A: Microfinance refers to the provision of financial services, such as small loans, savings accounts,…
Q: 3. Below are the bid and ask prices for a share of XYZ Company, which trades in a dealer market. Bid…
A: The bid price is the highest price that a buyer will pay for a security. The ask price is the lowest…
Q: Calculate the required rate of return for Mars Inc.'s stock. The Mars's beta is 1.1 , the rate on a…
A: The required rate of return for the company is the minimum return expected by the investors of the…
Q: The share price of a company is shs100. Its expected next dividend is shs3. The dividend and share…
A: Gorden Growth model is used to determine the intrinsic value of share or stock using the dividend,…
Q: Ramirez Company's current dividend is $2.00. Its dividend growth rate is expected to be at 40% for 2…
A: In calculation of stock price when there is variable growth rate will first calculating the expected…
Q: Consider the following information: State of Economy Recession Normal Boom Probability of State of…
A: Standard deviation of stock is computed by following formula:-Standard Deviation of stock = where…
Q: Use Excel to solve this problem. An $11,000 mortgage has a 30-year term and a 6% nominal interest…
A: >Please refer to the below spreadsheet for calculation and answer. Cell reference was also…
Q: The following three defense stocks are to be combined into a stock index in January 2019 (perhaps a…
A: Here,
Q: The Market Edge Mutual Fund charges a 3 percent back-end load. Todd invested $2,500 in this fund…
A: A mutual fund is an investment vehicle that pools money from multiple investors to invest in a…
Q: The company has issued equity stock priced at $200 each for its 15,000 shares. the company is…
A: We will employ the dividend discount model (DDM) approach for the purpose of calculating the equity…
Q: (a) Assuming annual compounding for all bonds and that each bond has a face value of $100, show that…
A: To immunize the liability, we need to construct a portfolio of coupon-paying bonds and zero-coupon…
Q: Please do not give solution in image formate thanku Find the Cost of Equity: The company has…
A: The dividend dividend discount model ( DDM) method,…
Q: Use the following data to complete the QUIZ: YEAR 0 1 2 3 4 WACC = 12.0000% Expected Net Cash Flow…
A: As per the Honor code of Bartleby we are bound to give the answer of first three sub part only,…
Ab .
134.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 9 images
- Drew can design a risky portfolio based on two risky assets, Origami and Gamiori. Origami has an expected return of 13% and a standard deviation of 20%. Gamiori has an expected return of 6% and a standard deviation of 10%. The correlation coefficient between the returns of Origami and Gamiori is 0.30. The risk-free rate of return is 2%. What is the Sharpe ratio of the optimal risky portfolio? A. 60.26% B. 12.19% C. 9.34% D. 47.78%Drew can design a risky portfolio based on two risky assets, Origami and Gamiori. Origami has an expected return of 13% and a standard deviation of 20%. Gamiori has an expected return of 6% and a standard deviation of 10%. The correlation coefficient between the returns of Origami and Gamiori is 0. The risk-free rate of return is 4%. What is the portfolio weight of Gamiori in the minimum variance portfolio? 80.00% 20.00% 13.00% 10.00%An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%. what is the standard deviation of returns on the optimal risky portfolio is ____?
- An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%. The expected return on the optimal risky portfolio is approximately ____?____. Using the risk and return profile calculated in Q10 and Q11 (standard deviation of the optimal risky portfolio is 21.4%), what is the percentage weight that you need to invest in the optimal risky portfolio if you want your complete portfolio to achieve 12% return? ___?___An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A is 20%, while the standard deviation on stock B is 15%. The correlation coefficient between the returns on A and B is 0%. The rate of return for stocks A and B is 20 and 10 respectively. The expected return on the minimum-variance portfolio is approximately _________.An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5%. The correlation coefficient between the returns of A and B is .50. The risk-free rate of return is 10%. The proportion of the optimal risky portfolio that should be invested in stock A is
- An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A is 24%, while the standard deviation on stock B is 14%. The correlation coefficient between the returns on A and B is .35. The expected return on stock A is 25%, while on stock B it is 11%. The proportion of the minimum-variance portfolio that would be invested in stock B is approximatelyIf your portfolio includes 35 percent of X, 40 percent of Y and 25 percent of Z, answer the following questions: (a) Calculate the portfolio expected return. (b) Calculate the variance and the standard deviation of the portfolio. (c) If the expected T-bill rate is 3.80 percent, calculate the expected risk premium on the portfolio. (d) If the market index fund has the same expected return as your portfolio, without considering any transaction cost, would you consider selling your portfolio and investing the market index fund instead? Explain your thoughts.You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 12 percent and 15 percent, respectively. The standard deviations of the assets are 29 percent and 48 percent, respectively. The correlation between the two assets is .25 and the risk-free rate is 5 percent. What is the optimal Sharpe ratio in a portfolio of the two assets? What is the smallest expected loss for this portfolio over the coming year with a probability of 2.5 percent?
- An investor can design a risky portfolio based on two funds, HighYieldBond and SmallCapStock. Fund HighYieldBond has an expected return of 20% and a standard deviation of return of 34%. Fund SmallCapStock has an expected return of 25% and a standard deviation of return of 38%. The correlation coefficient between the returns on HighYieldBond and SmallCapStock is 0.31. If an investor puts 0.45 into fund HighYieldBond, what is the standard deviation of the return on this portfolio?You are faced with two portfolios which you have been asked to rank in terms of selectivity. You have the following information: Risk-free rate is 4% Return on the market portfolio is 8% Return on portfolio A is 17% Return on portfolio B is 16% Actual beta of Portfolio A is 1.2, while target beta is 1 Actual beta of Portfolio B 1.0, while target beta is 0.9 Standard deviation of Portfolio A is 17% Standard deviation of Portfolio B 15% Standard deviation of the market portfolio is 7% Using Fama Decomposition, calculate the following for each portfolio: a) Return from Investor's risk b) Return from Manager's risk c) Return from Diversification d) Return from Net Selectivity e) Rank the performance of both portfolios based on return from selectivity and comment on your resultsAn investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 26% and a standard deviation of return of 34%. Stock B has an expected return of 20% and a standard deviation of return of 39%. The correlation coefficient between the returns on A and B is 0.56. How much should an investor put in stock B if he requires expected return of 23.35% on the risky portfolio?