You are given the following information concerning Cabinet Co., NewClear Co and the market.    Bear Market Normal Market Bull Market Probability 0.2 0.5 0.3 Cabinet Co. -20% 18% 50% NewClear Co. -15% 20% 10%   Assume that: 1. Of your R10,000 portfolio, you invest R9,000 in Cabinet Co. and R1,000 in NewClear Co. 2. NewClear and Cabinet are perfectly negatively correlated.  What is the expected return and standard deviation on your portfolio?

Q: The rate of return on U.S. T-bills is 3.25% and the expected return on the market is 9.50%. J&X,…

A: Systematic risk is the risk of the market volatility,  Systematic risk affects entire  market not…

Q: ear-to-date, Oracle had earned a 15.0 percent return. During the same time period, Valero Energy…

A: Portfolio return =Security 1 return * Weight + Security n return * Weight

Q: he financial controller is considering the use of the Capital Asset Pricing Model as a surrogate…

A: CAPM: Capital asset pricing model Under this model ris free return is used along with Beta and…

Q: ear-to-date, Oracle had earned a −1.34 percent return. During the same time period, Valero Energy…

A: Given that Oracle return=-1.34% Oracle Weight=30%=0.3 Valero Energy return= 7.96% Valero Energy…

Q: Shares Investment Beta BDO 210,000 2.00 TEL 90,000 2.00 SMC 300,000 1.00

A: Required rate of return refers to the minimum return that is accepted by an investor for holding the…

Q: Treasury bill yield is 10%, ABC company’s expected return for the next year is 18%, beta of ABC…

A: In this we have to use capital assets pricing model to get market rate of return.

Q: I will have info on 2 portfolios and the market benchmark, and you will calculate the CAPM = Rf +…

A: The question gives the following information:

Q: Investment bankers at Cowen & Co. announced that the stock of Planet Fitness (ticker: PLNT) has a…

A: Introduction US T bills: These are the government-issued securities, promised with a risk-free…

Q: The quoted rate of the short-term government security is 5% and a 2% premium is added to rate to…

A: Risk free rate = 5% Risk premium = 2%   Other information STOCK INVESTMENT BETA ABC 500,000 1…

Q: The market capitalization rate on the stock of Aberdeen Wholesale Company is 7%. Its expected ROE is…

A: The price-to-earnings ratio (P/E ratio) is the ratio that is used for valuing a company. It measures…

Q: A portfolio comprises Coke (beta of 1.6) and Wal-Mart (beta of 0.5). The amount invested in Coke is…

A: Given:

Q: Bulldogs Inc. has an investment fund amounting to P4,500,000. The portfolio consists of three stocks…

A: Portfolio beta = weighted sum of the individual asset betas. So we will first of all have to compute…

Q: A stock is selling for R61, a 6-month put at R60 is selling for R1.70, a 6-month call at R60 is…

A: Here, Call Price (C0) is R2.20 Strike Price (X) is R60 Put Price (P0) is R1.70 Current Price (S0) is…

Q: The current risk-free rate of return is 4.67%, while the market risk premium is 6.63%. The D'Amico…

A: In the given question we need to compute the D'Amico's cost of equity using Capital asset pricing…

Q: James Peterson has gathered the following information of 5 exchange-traded funds (ETFS). The…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The Treasury bill rate is 3%, and the expected return on the market portfolio is 14%. According to…

A: Part (a): Calculation of risk premium on the market: Answer: Risk premium is 11%

Q: need help on all

A: a.SmileWhite:Beta = 1.1Risk-Free Rate = 3.5%Expected Market Return = 15.5% Calculation of Required…

Q: Salalah Oil,has a cost of equity capital equal to 22.8 percent. If the risk-free rate of return is…

A: Cost of equity means cost of raising the money from common stock holder. Formula for cost of equity…

Q: Okik Inc. has a beta coefficient of 1.0 and a required rate of return of 12 percent. The market risk…

A: Capital Asset Pricing Model (CAPM): CAPM is the method of calculating the expected return on…

Q: The estimated factor sensitivities of Alpha PLC to Fama-French factors and the risk premia…

A: Required Return = Risk Free rate + (Factor Sensitivity*Market Risk Premium) +(Factor…

Q: The market value of common stock IS primarıly based on A. the firm's future earnings C. Total…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Following information is given from the books of Al Hamid Investment Services. The expected market…

A: To find the required rate using Capital Asset Pricing Model (CAPM), we will use the following…

Q: Your portfolio has three asset classes. U.S. government T-bills account for 49% of the portfolio,…

A: Expected Return on the portfolio = Weighted Average Return Weight of US T-bills = 49% Large Company…

Q: The difference in returns between Treasury bills and the FTSE Bursa Malaysia (FBM) KLCI is 5.50%.…

A: Risk free return = 3% Difference in returns between Treasury bills and the FTSE Bursa Malaysia (FBM)…

Q: A treasury bill pays a 6% rate of return. The market portfolio pays 15% with a probability of 20% or…

A: A treasury bill is issued by the government as short-term security. They have a maturity of less…

Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 12%. According che…

A: Given information : Treasury bill rate = 6% Expected return on market portfolio = 12% And, CAPM…

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: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta А…

A: Market's required return  10%   Risk Free rate 3%   Stock  Dollar Investment Beta A  $…

Q: Oakdale Furniture Inc. has a beta coefficient of 0.7 and a required rate of return of 15 percent.…

A: Required return= Risk Free Rate + Beta x (Risk Premium)       15% = Risk free rate + 5% x 0.7 Risk…

Q: The U.S. Treasury bill has a return of 4.75 percent while the S&P 500 is returning 12.8 percent.…

A: Jensen's alpha is also referred to as alpha that represents the average return on a portfolio or…

Q: A portfolio comprises Coke (beta of 1.6) and Wal-Mart (beta of 0.5). The amount invested in Coke is…

A: Given:

Q: A portfolio manager is holding the following investments: Stock Amount Invested Beta RM10 million…

A: Using CAPM, Expected Return = Risk free rate + (beta * market risk premium)

Q: You have assigned the following values to these three firms:     Price   Upcoming Dividend…

A: The formula to calculate required return using CAPM model is given below:

Q: ​(Capital asset pricing​ model)  Grace Corporation is considering the following investments. The…

A: The Capital Asset Pricing Model is used to determine the expected return of security. As per Capital…

Q: Jersey Jewel Mining has a beta coefficient of 1.3. Currently the risk-free rate is 2 percent and the…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: HLCM and PHN has a beta of 1.50 and 2, respectively. The average return on the market is 9.50% and…

A: Portfolio Beta is Weighted Average Beta.   Total investment of the Portfolio.   = P4,500,000…

Q: Assume that the CAPM is true, Rf = 5%,  Rm= 15% σm = 0.1. An investor with $10,000 to invest builds…

A:

Q: You are the investment manager for Global Assets Investments Company's mutual fund and you have…

A: Solution: (i). You pay cash for the stock : No. of the shares that we will able to buy =…

Q: sofie Inc. has an investment fund amounting to P4,500,000. The portfolio consists of three stocks…

A: Answer) Calculation of Portfolio’s Required rate of return Portfolio’s required rate of return =…

Q: The estimated beta for Caterpillar Inc. is 135. The risk free rate of return is 3 percent and the…

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

Q: Fremont Enterprises has an expected retun of 15% and Laurelhurst News has an expected return of 20%…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: There are only shares of A and B companies in the market. Currently, the market value of A and B…

A: 1. State Probability Ra Ra2 Ra2p Rb Rb2 Rb2p 1 0.3 0.30 0.09 0.027 0.20 0.04 0.012 2 0.4 0.15…

Q: Consider the three well diversified portfolios below. what will be the arbitrage profit per $10,000…

A: Portfolios are the collections or combinations of various investments and financial assets that are…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.