Question

You invest a total of $10,000 in 2 assets: Exxon Mobil (XOM) with an expected rate of return of 12% and a standard deviation of 15%; and a T-bill with a rate of return of 5%. What percentages of your money must be invested in XOM and the T-bill, respectively, to form a portfolio with an expected return of 10%?

Answer #1

The two risky assets you can invest in are Exxon and BP. Exxon
has a mean return of 8% and a standard deviation of 10%. BP has
mean return of 10 percent and standard deviation of 15 percent. The
correlation between the two is 0.25. The tangency portfolio has
weight of 55% in Exxon.
The risk free asset has return of 3.0
percent. What is the expected return and standard deviation of the
tangency portfolio?
You desire an expected return...

Suppose that you are considering various portfolios that mix
Exxon Mobil stock with American Airlines stock. These are the only
two risky assets in the portfolios. Suppose that the expected
returns on Exxon Mobil stock are 10% and the standard deviation of
returns is 20%. For American Airlines, the expected returns and
standard deviation are 6% and 15%, respectively. Returns on the two
stocks are perfectly negatively correlated. What is the risk (or,
standard deviation of returns) of the least...

You invest $100 partly in a risky asset with an expected rate of
return of 11% and a standard deviation of 21% and partly in T-bills
with a yield of 4.5%. What percentages of your money must be
invested in the risk-free asset and the risky asset, respectively,
to form a portfolio with a standard deviation of 8.0%?

ou invest $1,000 in a risky asset with an expected rate of
return of 0.17 and a standard deviation of 0.40 and a T-bill with a
rate of return of 0.04.
What percentages of your money must be invested in the risky asset
and the risk-free asset, respectively, to form a portfolio with an
expected return of 0.11?
Select one:
a. 53.8% and 46.2%
b. 75% and 25%
c. 62.5% and 37.5%
d. 46.2% and 53.8%
e. Cannot be determined.

You invest $10,000 in a complete portfolio. The complete
portfolio is composed of a risky asset with an expected rate of
return of 20% and a standard deviation of 21% and a treasury bill
with a rate of return of 5%. How much money should be invested in
the risky asset to form a portfolio with an expected return of
8%?

You invest $10,000 in portfolio XYZ. The portfolio XYZ is
composed of a risky asset with an expected rate of return of 15%
and a standard deviation of 20% over the one year time period. The
risk free asset has a rate of return of 5% over the same time
period. How much money should be invested in the risky asset so
that the standard deviation of returns on XYZ portfolio is 10% over
the one year time horizon

You are considering investing $1,000 in a T-bill that pays 0.05
and a risky portfolio, P,
constructed with 2 risky securities, X and Y. The weights of X
and Y in P are 0.60 and 0.40,
respectively. X has an expected rate of return of 0.14 and
variance of 0.01, and Y has an
expected rate of return of 0.10 and a variance of 0.0081. The
coefficient of correlation, rho,
between X and Y is 0.45.
a. If you desire...

An investor chooses to invest 60% of a portfolio in a risky fund
and 40% in a T-bill fund. The expected return of the risky
portfolio is 17% and the standard deviation is 27%. The T-bill rate
is 7%.
What is the Sharpe ratio of the risky portfolio and the
investor’s overall portfolio?
Suppose the investor decides to invest a proportion (y) of his
total budget in the risky portfolio so that his overall portfolio
will have an expected return...

Kelly Smart manages a risky portfolio with an expected rate of
return of 24% and a standard deviation of 35%. The T-bill rate is
5%. Kelly's client, Tom Tenge, decides to invest in her risky
portfolio a proportion (y) of his total investment budget so that
his overall portfolio will have an expected return of 16%. The
remainder of his budget (1-y) is invested in T-bill. What is the
standard deviation of Tom's overall portfolio?

Assume that you manage a risky portfolio with an expected rate
of return of 15% and a standard deviation of 30%. The T-bill rate
is 5%. Your client chooses to invest 120% of a portfolio in your
fund and -20% in a T-bill money market fund.
a. Suppose your risky
portfolio includes the following investments in the given
proportions:
Stock A 30%
Stock B 50%
Stock C 20%
What are the investment proportions of
your client’s overall portfolio, including the...

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