You put half of your money in a stock that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a bond that has an expected return of 6% and a standard deviation of 12%. The stock and bond have a correlation of .55.(Continued from the previous question) You are forming a Capital Allocation Line (CAL) using the risk-free asset with a 4% return and the portfolio described in the previous question.  What is the slope of the CAL?  Round your answer to two decimal places.

Q: The Treasury bill rate is 4%, and the expected return on the market portfolio is 12%. Using the…

A: Risk free rate = 4% Market return = 12% Beta of stock X = 1.5

Q: Based on Capital Asset Pricing Model (CAPM), calculate the return on market portfolio if the Nestle…

A: The required rate of return can be ascertained by using the Capital Asset Pricing Model (CAPM). The…

Q: Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 9.50% required…

A: A portfolio comprises of different securities, funds, assets and derivates which are purchased by…

Q: The Blackwell mutual fund has a stock portfolio that are consists of the following companies. Stock…

A: Beta It helps to measure the stock volatility related to an overall market. It is computed in order…

Q: What is required return using the capital asset pricing model if a stock's beta is 1.2 and the…

A: Required Return = Risk free Rate + Beta  * (market return - risk free rate)

Q: Example: Suppose you want to invest in one stock and one bond. The expected return and standard…

A: Given information : Asset Weight Expected return Standard deviation Stock  70% 9% 16% Bond…

Q: A stock has a beta of 1.26 and an expected return of 12.4 percent. A risk-free asset currently earns…

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

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

A: A portfolio is a combination or group of financial instruments and securities that are held by an…

Q: Assume that you manage a $12.00 million mutual fund that has a beta of 1.15 and a 9.70% required…

A: Required return = Rf + Beta (Rm- Rf) Where, Rf = Risk free return  Rm = Market return  9.70 = 2.2 +…

Q: Suppose that the S&P 500, with a beta of 1.0, has an expected return of 13% and T-bills provide a…

A: Data given: Two types of assets: i) S&P 500 with expected return = 13% with a beta of 1.0 ii)…

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

A: Expected retun on a portfolio is calculated as below: It can also be calculated by calculating the…

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: e Treasury bill rate is 6%, and the expected return on the market portfolio is 14%. According to the…

A: We need to use CAPM to calculate required rate of return. The equation Required rate of return =Risk…

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: There are two risky assets, debt and equity. The expected return is 8% on the debt and 13% on the…

A: Expected return of debt (Rd) = 8% Expected return of equity (Re) = 13% Standard deviation of debt…

Q: Suppose the risk-free rate is 6 percent and the market portfolio has an expected return of 12…

A: The question can be answered by determining the expected return for the stock using the capital…

Q: Risk free rate is 3%, you predict market expected return to be 11%, beta for stock x is 1.25, beta…

A: Given information: Risk free rate is 3% Expected market return is 11% Beta of stock X is 1.25, Beta…

Q: You are considering investing $1,000 in a T-bill that pays 0.06 and a risky portfolio, P,…

A: To solve the question we first need to determine the expected return of the risky portfolio then…

Q: Adam wants to determine the required return on a stock portfolio with a beta coefficient of 0.5.…

A: Required rate of return = risk free rate + beta * (market return - risk free rate)

Q: The Treasury bill rate is 4.9%, and the expected return on the market portfolio Is 11.1%. Use the…

A: According to the rule, we will answer the first three subparts, for the remaining subparts, kindly…

Q: Consider an investment portfolio that consists of three different stocks, with the amount invested…

A: Given  The risk free rate is 2.5% The market risk premium is 6%

Q: Suppose you estimate that stock A has a volatility of 32% and a beta of 1.42, whereas stock B has a…

A: Total risk of the stock can be calculated by squaring the values of the stock volatility. It can…

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: 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: A stock has a beta of 1.8 and an expected return of 13 percent. A risk-free asset currently earns…

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

Q: A portfolio that combines the risk-free asset and the market portfolio has an expected return of 6.4…

A: Given Expected return is 6.4% and standard deviation is 9.4%. The risk free rate is 3.4%  Expected…

Q: You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P,…

A: Weight in Risk Portfolio = 40% Therefore, Weight of X = 40% * 60%  = 24% Weight of Y = 40% * 40%  =…

Q: You are considering investing $1,000 in a T-bill that pays a rate of return of 0.06 and a risky…

A: Rate of return means the interest rate which is earned by an investor or which a potential investor…

Q: The Blackwell mutual fund has a stock portfolio that are consists of the following companies. Stock…

A: stock proportional in the portfolio beta Gazprom 0.25 1.4 Shell 0.3 1.6 Exxon Mobil 0.3 1.5…

Q: Consider stocks of Firms A and B. Their expected returns are 12% and 11%, respectively, and the…

A: In the given question we are provided with the information regarding stocks of two firms A and B.…

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: An investors invests in a combination of the market portfolio and the risk-free asset. The expected…

A:

Q: y where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta…

A: A. The expected returns can be calculated as follows : Calculations for above :

Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 10%. According to…

A: Since you have asked a question with multiple parts, we will solve the first 3 parts for you. Please…

Q: Suppose the rate of return on short-term government securities (perceived to be risk-free) is about…

A: according to CAPM model: rs=rf+βs×rm-rfwhere,rf= risk free returnrm= market returnβs= beta

Q: A stock has a beta of 1.38 and an expected return of 13.6 percent. If the risk-free rate is 4.7…

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

Q: Consider two types of assets: market portfolio (M) and stock A. The expected return is 8% and…

A: Given: Market rate = 8% Risk free rate = 2% Standard deviation of market portfolio = 15% Standard…

Q: The Treasury bill rate is 6%, and the expected return on the market portfolio is 14%. According to…

A: (a) Risk premium on the market = Expected market return - risk free return                    = 14%…

Q: You have recently received $400,000 and you are considering investing $250,000 in the WIG and the…

A: The portfolio expected return refers to the weighted average return of the individual securities.…

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 the Capital Asset Pricing Model holds. The market portfolio has an expected return of…

A: IF Capital Asset Pricing Model (CAPM) hold good, Expected Return on Stock = Risk-Free rate + (…

Q: Suppose the rate of return on short-term government securities (perceived to be risk-free) is about…

A: In the given question we need to compute the Expected rate of return on the market portfolio in Part…

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

A: The CAPM the capital assets pricing model gives the risk adjusted return of the security and gives…

Q: A stock has a beta of 1.2 and an expected return of 11.8 percent. A risk-free asset currently earns…

A: Portfolio weight refers to the holding of all assets or investments. Weight of risk-free asset in a…

Q: The Treasury bill rate is 4%, and the expected return on the market portfolio is 14%. According to…

A: Dear Student as per Bartleby's answering guideline we can not answer more than three sub-parts. to…