This question requires Excel You want to invest $50,000 in a portfolio with a beta of no more than 1.4 and an expected return of 12.4%. Bay Corp. has a beta of 1.2 and an expected return of 11.2%, and City Inc. has a beta of 1.8 and an expected return of 14.8%. The risk - free rate is 4%. Is it possible to create this portfolio investing in Bay Corp. and City Inc.? If so, how much will you invest in each?
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- A company's fund manager has a P20,000,000 portfolio with a beta of 0.75. The risk-free rate is 4.50% and the market risk premium is 5.00%.The manager expects to receive an additional P30,000,000, which she plans to invest in several stocks. After investing the additional funds, she wants the fund's required return to be 9.50%. 1. What is the required rate of return on the initial P20M investment? 2. What is the rate of return of all risky and risk-free securities? 3. To achieve the fund manager’s required return target, the funds should be invested in an investment with a beta of 4. Judge the overall riskiness of the P50M portfolio A. Aggressive B. Neutral C. ConservativeA firm of investment looking for optimal investment portfolio for its client The client wants to invest a total of 10 million SEK at most and demands the maximum tum. The proposal is to invest in stocks with an expected return of 1% pa. in bonds with an expected return of 6% pa and into share certificates with an expected yield of 7% pa . The investment tim rated the riskiness of the investment in stocks 9 points per invested Krona in bonds 8 points per invested Krona and in share certificates 5 points per invested Krona , and the cient does not want the riskiness of the investment to exceed the limit of 80 million points. At the same time, the liquidity of the investment in stocks was rated 4 points per invested Krona in bonds, 3 points per invested Krona and in share certificates 1 points per invested Krona , and the client wants the total liquidity of the investment to at least 20 million points . Find optimal portfolio for the client ?A mutual fund manager has a $450 million portfolio with a beta of 1.20. The risk-free rate is 2.5%, and the market risk premium is 5.00%. The manager expects to receive an additional $150 million which she plans to invest in several different stocks. After investing the additional funds, she wants to reduce the portfolio's risk level so that once the additional funds are invested the portfolio's required return will be 7.50%. What must the average beta of the new stocks added to the portfolio be (not the new portfolio's beta) to achieve the desired required rate of return?
- A manager has a $200.0 million portfolio with a beta of 1.40. The risk-free rate is 4.0%, and the market risk premium is 5.0%. The manager expects to receive an additional $50.0 million which they plan to invest in several stocks. After investing the additional funds, they wants the fund's required return to be 12%. What is the required return on their portfolio (before they receive the additional funds)? If they want the fund's required return to be 12% (after they invest the additional $50 million), what must be the beta of the new portfolio? What must the average beta of the new stocks added to the portfolio be to achieve the desired required rate of return? please solve in excel.A financial investor is looking to purchase a new portfolio. Hedge Fund A (HFA) offers a portfolio that is worth an expected £35mil. HFA has analysts who can build a model to boost this portfolio. The boost would add an amount that has a Normal Distribution with mean £3mil and standard deviation £0.5mil. HFA wishes to sell his financial services at a fee that guarantees his expected profit will be 5% of the total value of the portfolio. 1. Calculate the fee of HFA’s financial services. 2. Simulate (with a min of 200 repetitions) the average and the standard deviation of the hedge fund’s profit when setting the fee between 1% and 10% of the total expected value of the portfolio. Then discuss your findings. 3. Now assume the financial investor knows that another hedge fund (HFB) will offer a competitive portfolio. Based on historical data, he knows HFB portfolio’s total value follows a normal distribution with mean £36mil and standard deviation of £2mil and charges a 5% fee. The…As a mutual fund manager, you have a $40.00 million portfolio with a beta of 1.20. The risk-free rate is 3.25%, and the market risk premium is 7.00%. You expect to receive an additional $10.00 million which you plan to invest in additional stocks. After investing the additional funds, you want the fund's required and expected return to be 12.00%. What must the average beta of the new stocks be to achieve the target required rate of return? Do not round your intermediate calculations.
- You create a portfolio consisting of $23000 invested in a mutual fund with beta of 1.3, $25000 invested in Treasury Securities (assume risk-free), and $12000 invested in an index fund tracking the market. According to surveys, the expected market risk premium is 6.6%, Risk-free rate is 1.3%. What is the expected return of this portfolio according to CAPM?Ms Pau Cam has a Php40-million portfolio with a beta of 1.20. The risk- free rate is 5%, and the market risk premium is 6%. Ms. Pau expects to receive an additional Php40 million which she plans to invest in the stock market. After investing the additional funds, she wants the fund’s required and expected return to be 15%. What must be the average beta of the new stock to reach the target required rate of return?ou plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient A $160 million 0.5 B 120 million 1.5 C 80 million 1.8 D 80 million 1.0 E 60 million 1.4 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 3%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 -25 % 0.2 0 0.4 13 0.2 30 0.1 51 What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) ri = 0.8% + (10.8%)bi ri = 0.8% + (12.3%)bi ri = 3.0% + (10.8%)bi ri = 2.3% + (10.2%)bi ri = 3.0% + (12.3%)bi Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount…
- Bulldogs Inc. has an investment fund amounting to P4,500,000. The portfolio consists of three stocks within the retail industry. P1,350,000 is invested in HLCM, 45% in MWIDE and the remaining in PHN. HLCM and PHN has a beta of 1.50 and 2, respectively. The average return on the market is 9.50% and it is 5% greater than the risk-free rate. The portfolio beta of investment held by Bulldogs Inc. is 2.What is the beta of stock MWIDE? a. 2.55 b. 2.33 c. 3.22 d. 3.55A mutual fund company has cash resources of birr 200 million for investment in a diversified portfolio. Table below shows the opportunity available, their estimated yields, risk factors and term period of details. Annual yield (%) Risk Factor Time period ( years) Bank deposit 9.5 0.02 6 treasury notes 8.5 0.01 4 corporate deposits 12.0 0.08 3 blue chip stocks 15.0 0.25 5 speculative stocks 32.5 0.45 3 real estates 35.0 0.04 10 Formulate the L.P. model to find the optimal portfolio that will maximize return, considering the following policy guidelines: i) All funds available may be invested ii) Weighted average period of at least 5 years should be the planning horizon iii) Weighted average risk factor must not exceed 0.20 iv) Investment in real estate and speculative stocks together must not be more than 25% of the money investedBeing Finance Manager of Salalah Textiles Industries, you need to invest an amount for OMR 50,000 in the investment market. Assume the market rate of return is 0.11, risk free rate of return is 2.75% and Beta is .73, then:Required:a) What should be required rate of return for your investment?