The investor has set aside an amount of Rs 5,00,00 to be equally divided into aggressive and defensive portfolio. He wants to follow Constant Rupee Plan and rebalance the portfolio whenever there is a trigger point of 20% change or more in the market price of aggressive portfolio. Given the share price movement below show how the portfolio rebalancing will be carried out and compare the Plan with Buy and Hold strategy. Period Price 1 125 2 140 3 150 4 135 5 125 6 115 7 125 8 145

Q: (a) An investor wishes to construct a portfolio consisting of a 30 percent allocation to a share…

A: Expected return = Sum of [ Asset's Weight in portfolio * Asset's expected return]

Q: Currently, the risk-free return is 4 percent, and the expected market rate of return is 14 percent.…

A: We will first find the beta of the portfolio. Portfolio beta = weighted average of betas of…

Q: You are an analyst for a large public pension fund and you have been assigned the task of evaluating…

A: Financial statements are statements which states the business activities performed by the company .…

Q: A Palestinian investor decides to hold a portfolio with 80% invested in the S&P 500 stock index and…

A: Weight of S&P = 80% Weight of MSCI Market Index = 20% Expected Return on S&P = 9.93%…

Q: A client of ZBX Financial Planning is considering a shift in her portfolio holdings.  Given recent…

A: CAPM The financial sector makes extensive use of the CAPM formula. As the CAPM calculates the cost…

Q: Suppose that a portfolio consist of three securities: A, B and C with expected rates of return of…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

Q: If you create a portfolio for your client with 73 percent invested in the S&P 500 U.S. stock index…

A: Portfolio return is  the weighted average return of the various securities of the portfolio:…

Q: Mr. Scared, a portfolio manager has a P10 million portfolio, which consist of P1 million invested in…

A:

Q: Presently, the risk-free rate is 4 percent (Rf )and the expected return on the market portfolio…

A: required return = risk free rate + beta*market risk premium GM required return = 4% + 1.2*(9 - 4)% =…

Q: You are investing in a portfolio consisting two shares - D and E. You plan to invest 70% of your…

A: the expected return of a portfolio is weighted average return of individual stocks or funds or…

Q: You are currently long on a portfolio of stocks that has a beta of 1.60. Given recent uncertainties,…

A: Given, Portfolio Beta = 1.60 Intend to reduce beta to 1.20 Current portfolio worth = RM 2.8 million…

Q: You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of…

A: Given: Investment = $1000 Return on treasury bills = 2.5% Weight of X = 35% Weight of Y = 65% Return…

Q: You are an analyst for a large public pension fund and you have been assigned the task of evaluating…

A: a.Calculate the expected rate of return for Manager Y as follows:

Q: Calculate covariance and coefficient of correlation between the returns of the stocks A and B.

A: Covariance is calculated by analyzing at-return surprises (standard deviations from the expected…

Q: You have just invested in a portfolio of three stocks. The amount of money that you invested in each…

A: The formulae for the calculation of Beta of portfolio:Beta of portfolio=∑(Height of stock*Beta of…

Q: need help

A: A.Calculate the alpha of portfolios as follows:Portfolio A:

Q: Consider a portfolio that comprise of 35% INP-INVESTEC PLC stock, 35% INLINVESTEC LTD stock, and 30%…

A: CAPM is financial model which compute the possible return to investor at given risk by considering…

Q: Portfolios A and B are actively managed. Based on current dividend yields and expected capital gains…

A: given, ra=10%rb=17%betaa=0.5betab=1.4rf=2%rm=12%σa=26%σb=35%σm=21%

Q: Presently, the risk-free rate is 4 percent (Rf )and the expected return on the market portfolio…

A: A model that represents the relationship of the required return and beta of a particular asset is…

Q: Currently the risk-free return is 3 percent and the market risk premium is 8 percent. What is the…

A: Risk-free rate = 3% Market risk premium = 8% According to CAPM: Required return = Risk-free rate +…

Q: You are currently considering in investing Rs.1.2 million in equity investment portfolio. Your…

A: Expected Return and Standard Deviation of the portfolio help an investor to determine the…

Q: A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7…

A: An expected return is defined as the profit / loss, where an investors used to anticipate on their…

Q: If the expected rates of return on Portfolio A and B are 11% and 14% respectively and the Beta of A…

A: CAPM or Capital Asset Pricing Model is a model which defines the relationship between expected…

Q: Consider a treasury bill with a rate of return of 5% and the following risky securities: Security A:…

A: A ratio that provides information regarding the return of a security to the investor in comparison…

Q: Suppose, a passive portfolio, that is, one invested in a risky portfolio that mimics the DSE Broad…

A: Ans: (i) Currently the client has invested in active portfolio. So his expected return is 13% and…

Q: are invested in stock A and the rest in stock B. What is the expected return on the portfolio of…

A: Given information :

Q: 1. You are considering investing $1000 in a complete portfolio. The complete portfolio is composed…

A: The question is based on the concept weighted return from different asset class. Return from a…

Q: Stanislas Korowski owns a portfolio con- sisting of the following stocks below: Mytab PERCENTAGE OF…

A: Note: As per our guidelines, we can only answer first three subparts. Please post other subparts…

Q: What is the expected return of a portfolio that has $8,000 invested in S and $2,000 invested in T?…

A: Return of Stock S = (0.25 * 30%) + ( 0.5 * 15% )+ (0.25 * -10%) = 7.5 + 7.5 - 2.5 = 12.5 Return of…

Q: 1. What is the required rate of return on the initial P20M investment?   2. What is the rate of…

A: Formula used is as follows: Required rate of return = Rf + Beta * (Rm - Rf)

Q: You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of…

A: In treasury bills:(1-a) in risky portfolio0.35x+0.65y=1-aExpected return from…

Q: Assume that you have just received information from your investment advisor that your portfolio has…

A: Portfolio Investment is termed for investor holding whose funds are diversified in several assets…

Q: Currently, the risk-free return is 4 percent, and the expected market rate of return is 11 percent.…

A: In this we have to calculate the beta of portfolio and from that we will get expected return of…

Q: You are currently considering in investing Rs.1.2 million in equity investment portfolio. Your…

A: Given: P Expected return = 25% Q Expected return = 22% R Expected return = 20%

Q: Suppose you created a two-stock portfolio by investing $50,000 in High Tech and $50.000 in…

A: To Find: Portfolio expected return Standard deviation of portfolio Sharpe ratio CoV

Q: Currently the risk-free rate equals 5% and the expected return on the market portfolio equals 11%.…

A: Given: Risk free rate “Rf” = 5% Market return “Rm” = 11% Stock A Beta = 1.33 Stock B Beta = 0.7…

Q: Your Company's manager has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%,…

A:

Q: TABLE 1. Fim Portfolio Data - Expedel returns on cOMmponent stocks (%) in fundion of the state of…

A: We should first compute the expected return of the portfolio and its standard deviation. Then we…

Q: The investment funds for your company includes the following: Stock $ Amount Invested Beta for…

A: Beta represents the systematic risk of any company. This means that it basically indicates the…

Q: f you create a portfolio for your client with 73 percent invested in the S&P 500 U.S. stock index…

A: Portfolio return is  the weighted average return of the various securities of the portfolio:…

Q: Assume that you are considering investing in two risky assets, namely PKX and XIY, with the…

A: Expected return of the portfolio means the mean of the probability distribution of investment…

Q: You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of…

A: This is solved using concepts of portfolio management

Q: You are an analyst for a large public pension fund and you have been assigned the task of evaluating…

A: Financial statements are statements which states the business activities performed by the company .…

Q: An analyst wants to evaluate Portfolio X consisting entirely of US common stocks, using both the…

A: Sharpe and Treynor ratios are calculated by the investors to determine the relationship between the…

Q: Investor A wants to borrow 1000 TL with risk- free interest rate = 5% and combine it with 800 TL…

A: Portfolio return = ∑W*r W is investment weightage and r is return of assets As the correlation of…

Q: An investor wishes to add new stocks to her portfolio. She has information about two assets, Stock A…

A: For deciding which stock to purchase we need to calculate the required rate of return on each…

Q: Your employer has asked you to investigate the firm’s portfolio risk and return. The portfolio…

A: State of economy Probability Stock-A Stock-B Stock-C Good 60.00% 3.00% 34.00% 70.00% Poor 40.00%…

Q: firm’s portfolio risk and return.

A: Portfolio's Risk and Returns: Portfolio's risk and return states the relationship between the…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.