Question

For an asset or portfolio of assets, the expected return is represented by its ________________ and...

For an asset or portfolio of assets, the expected return is represented by its ________________ and its risk by its _____________________.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

For an Asset or portfolio of Asset, the expected return is represented by its BETA and its risk by its STANDARD DEVIATION.

Beta of an Asset shows the return of an Asset or portfolio of an asset in relation to the market return. For eg- If a stock has Beta of 1.2% it means, if market returns are 10% then stock will give returns of 12% (10% * 1.2 )

Standards deviation shows the risk associated with an asset or portfolio of Asset.

Incase of any doubt, please comment below. I would be happy to help.

Please upvote the answer if it was of help to you.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ou are constructing a portfolio of two assets. Asset A has an expected return of 12...
ou are constructing a portfolio of two assets. Asset A has an expected return of 12 percent and a standard deviation of 24 percent. Asset B has an expected return of 18 percent and a standard deviation of 54 percent. The correlation between the two assets is 0.20 and the risk-free rate is 4 percent. What is the weight of each asset in the portfolio of the two assets that has the largest possible Sharpe ratio? (Do not round intermediate...
Consider a portfolio that consist of 2 assets A and B; Asset Expected Return Standard Deviation...
Consider a portfolio that consist of 2 assets A and B; Asset Expected Return Standard Deviation Correlation A 20% 10% B 40% 20% A&B -1 Compute the asset weights (WA and WB) so that an investor obtains a zero risk portfolio. Show all your workings and calculations.
You are constructing a portfolio from two assets. The first asset has an expected return of...
You are constructing a portfolio from two assets. The first asset has an expected return of 7.7% and a standard deviation of 7.8%. The second asset has an expected return of 10.2% and a standard deviation of 12.6%. You plan to invest 41% of your money in the first asset, and the rest in asset 2. If the assets have a correlation coefficient of -0.61, what will the standard deviation of your portfolio be?
There are 2 assets. Asset 1: Expected return 7.5%, standard deviation 9% Asset 2: Expected return...
There are 2 assets. Asset 1: Expected return 7.5%, standard deviation 9% Asset 2: Expected return 11%, standard deviation 12%. You are not sure about the correlation between 2 assets. You hold 30% of your portfolio in asset 1 and 70% in asset 2. What is the highest possible variance of your portfolio? Hint 1: Think how the portfolio variance depends on the correlation between 2 assets. Hint 2: Think which values the correlation between Asset 1 and Asset 2...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7.4 percent and a standard deviation of 10.4 percent. The risk-free rate is 4.4 percent, and the expected return on the market portfolio is 12.4 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .49 correlation with the market portfolio and a standard deviation of 55.4 percent?  Enter your answer as a percent...
You have the following assets available to you: Asset Expected Return Riskless debt 3.8% Portfolio of...
You have the following assets available to you: Asset Expected Return Riskless debt 3.8% Portfolio of small cap stocks 9.0% Portfolio of large cap stocks 7.3% Portfolio of growth stocks 13.3% Portfolio of value stocks 8.8% S&P500 index fund 9.9% What is the cost of equity for a firm with a market beta of 3.4, a SMB beta of 1.9, and a HML beta of 2.4? You may assume this firm has an alpha of zero. Please give your answers...
Q.8      Consider the following assets: asset Expected return Standard deviation Beta Risk-free asset 0.06 0 0...
Q.8      Consider the following assets: asset Expected return Standard deviation Beta Risk-free asset 0.06 0 0 Market portfolio 0.22 0.20 1 Stock E 0.24 0.25 1.25 An investor wants to earn 24%, which one of the following strategies is optimal? Explain why suboptimal strategies should not be chosen. Borrow at the risk-free rate and invest in stock E because the risk –free asset will offset some of the risk of stock E. Borrow at the risk-free rate and invest in...
You are constructing a portfolio of two assets, asset X and asset Y. The expected returns...
You are constructing a portfolio of two assets, asset X and asset Y. The expected returns of the assets are 7 percent and 20 percent, respectively. The standard deviations of the assets are 15 percent and 40 percent, respectively. The correlation between the two assets is .30 and the risk-free rate is 2 percent. Required: a) What is the optimal Sharpe ratio in a portfolio of the two assets? b) What is the smallest expected loss for this portfolio over...
1. There are 2 assets you can invest in: a risky portfolio with an expected return...
1. There are 2 assets you can invest in: a risky portfolio with an expected return of 6% and volatility of 15%, and a government t-bill (always used as the 'risk-free' asset) with a guaranteed return of 1%. Your risk-aversion coefficient A = 4, and the utility you get from your investment portfolio can be described in the standard way as U = E(r) - 1/2 * A * variance. Assume that you can borrow money at the risk-free rate....
Calculate the expected return andstandard deviation of a portfolio invested in the following two risky assets.
a) Calculate the expected return andstandard deviation of a portfolio invested in the following two risky assets.SecurityWE(r)σA40%1018.63B60%58.27Correlation coefficient ρ= - 0.49b) Calculate the expected return of a complete portfolio invested equally in the risky portfolio calculated previously (a) and risk-free asset with 4% return. Compare your results?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT