It will take exactly N₁ years for the value in your current portfolio to double at 5%.If we use the rule of 70, at 5%, it will take N₂ years. What is N₁-N₂ rounded to 2decimal places?0.09O 0.000.45O 0.96

Rule of 70 is the rule which tell that how much time taken to double the value.

Answered: It will take exactly N₁ years for the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You want to calculate the 30 Day 95% VaR for the following portfolio. You invest $5 million in the NADAQ composite and short $4 million of Bitcoin. The NASDAQ composite has standard deviation of returns of 15% pa; Bitcoin has standard deviation of returns of 20%. The two assets have a correlation of 0.8. Assuming a 250 day year, what is the 30 day VaR?
If the one year ahead forecasted return on a portfolio is always 3% and dividends on the portfolio are known to be 2 per year in the future what is the efficient markets price of the portfolio?
A portfolio has a 4.0 percent chance of losing 15 percent or more according to the VaR when T = 1.This can be interpreted to mean that the portfolio is expected to have an annual loss of 15 percent or more once in every how many years?
Value of the portfolio today is $100. Annual mean μ= 20%, variance ?2=10%. Time horizon is one year. What is the V@R at R% probability?
What is the expected return of a portfolio that has $8,000 invested in S and $2,000 invested in T? The risk-free rate is 6% and the market portfolio's return is 14%. Do you expect the investment to be a good one for the coming year if betas for the two portfolio components are 0.6 and 1.3, respectively?
Assume the riskless rate of interest is 2% per year, and the expected rate of return on the market portfolio is 8% per year. According to the CAPM, what is the efficient way for an investor to achieve an expected rate of return of 5% per year? If the standard deviation of the rate of return on the market portfolio is 4%, what is the standard deviation of the portfolio producing the 5% expected return? • Plot the CML and locate the foregoing portfolios on the same graph. • Plot the SML and locate the foregoing portfolios on the same graph.
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $110,000 or $280,000 with equal probabilities of .5. The alternative risk-free investment in T-bills pays 6% per year. Now suppose that you require a risk premium of 10%. What is the price that you will be willing to pay? (Round your answer to the nearest whole dollar amount.)
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $75,000 or $330,000 with equal probabilities of 0.5. The alternative risk-free investment in T-bills pays 3% per year. Now suppose that you require a risk premium of 12%. What price are you willing to pay?.
You are considering the purchase of real estate that will provide perpetual income that should average $70,000 per year. How much will you pay for the property if you believe it's market risk is the same as the market portfolio's? The T-bill rate is 5% and the expected market return is 8.0%.
Suppose you have $2,000 to invest. The market portfolio has an expected return of 10.5 percent and a standard deviation of 16 percent. The risk-free rate is 3.75 percent. How much should you invest in the risk-free asset if you wish to have a 15 percent return on the portfolio?
You have a fixed income portfolio worth $1,000,000. The yield curve is flat at 4.5% per year. Suddenly, interest rates increase, with the yield curve shifting up by 0.5% (i.e., from 4.5% to 5.0%). Your portfolio’s value drops by $20,000 as a result. What must have been the duration of your fixed income portfolio before this change in interest rates?
Suppose that you have $1 million and the following two opportunities from which to construct a portfolio:a. Risk-free asset earning 12% per year.b. Risky asset with expected return of 30% per year and standard deviation of 40%.If you construct a portfolio with a standard deviation of 30%, what is its expected rate of return?

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It will take exactly N₁ years for the value in your current portfolio to double at 5%. If we use the rule of 70, at 5%, it will take N₂ years. What is N₁-N₂ rounded to decimal places? 0.09 0.00 O 0.45 0.96