EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 8, Problem 18P
Summary Introduction
To determine: Expected beta of portfolio.
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The UIB company desires to construct a portfolio with 15% expected return. The portfolio is to consist of some combination of security X and security Y, which have the following expected returns, standard deviations of returns, and betas:
Security X
8%
6%
0.94
Security
19%
15%
1.50
Market portfolio
13%
4%
Risk free return
2%
Expected return
Standard deviation
Beta
Determine the beta of the portfolio
Talal can pick one of two investment portfolios - A and B. Each requires an initial outlay of $100,000 and each has a most likely annualrate of return of 18%. Estimated the returns associated with each investment. Past estimates indicate that the probabilities of thepessimistic, most likely, and optimistic outcomes are 30%, 50%, and 20%, respectively. Note that the sum of these probabilities mustequal 100%; that is, they must be based on all the alternatives considered.Question:1. Explain him about risk aversion, risk neutrality and risk seeking on the bases of standard deviation and coefficient of variation.DetailsAsset AAsset B1.Initial Investment$100.000$100,000Rate of Return - Pessimistic16%10%Rate of Return - Most likely18%18%Rate of Return - Optimistic20%26%
You are going to invest $50,000 in a portfolio consisting of assets X, Y, and Z, as follows;
What is the expected return of this portfolio?
Calculate the beta coefficient of the portfolio
Chapter 8 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 8 - Prob. 1QTDCh. 8 - Prob. 2QTDCh. 8 - Prob. 3QTDCh. 8 - Prob. 4QTDCh. 8 - Prob. 5QTDCh. 8 - Prob. 6QTDCh. 8 - Prob. 7QTDCh. 8 - Prob. 8QTDCh. 8 - Prob. 9QTDCh. 8 - Prob. 10QTD
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