Question

You want to allocate your money between the risk free asset (1.7%), a fixed income fund...

You want to allocate your money between the risk free asset (1.7%), a fixed income fund ( E(B)=8.9%, Volatility(B)=11%), and a diversified stock fund ( E(S)=13%, Volatility(S)=20%). The correlation between the two risky funds is 0.35. When creating the optimal risky portfolio, how much weight in percentage should you invest in the diversified stock fund?

{Give your answer as a percentage with 2 decimals, e.g., if the answer is 0.5345224 (or 53.45224%) , enter 53.45 as your answer.}

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

ANSWER : 28.80%

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
Consider the following capital market: a risk-free asset yielding 2.25% per year and a mutual fund...
Consider the following capital market: a risk-free asset yielding 2.25% per year and a mutual fund consisting of 80% stocks and 20% bonds. The expected return on stocks is 13.25% per year and the expected return on bonds is 3.95% per year. The standard deviation of stock returns is 40.00% and the standard deviation of bond returns 14.00%. The stock, bond and risk-free returns are all uncorrelated. a. What is the expected return on the mutual fund?  11.39 b. What is...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 17 % 35 % Bond fund (B) 14 18 The correlation between the fund returns is 0.09.    Solve numerically for the proportions...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 9%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 17 % 38 % Bond fund (B) 13 18 The correlation between the fund returns is 0.12. Solve numerically for the proportions of...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 7%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 19 % 31 % Bond fund (B) 14 23 The correlation between the fund returns is 0.10.    Solve numerically for the proportions...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 6%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 21 % 28 % Bond fund (B) 12 18 The correlation between the fund returns is 0.09.    Solve numerically for the proportions...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 5.5%. The probability distributions of the risky funds are:     Expected Return Standard Deviation   Stock fund (S) 15 % 32 %   Bond fund (B) 9 % 23 %     The correlation between the fund returns is 0.15.     a. What...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long term government and corporate bond fund, and the third is a T-Bill money market fund that yields a sure rate of 4.8%. The probability distributions of the risky funds are: expected return standard deviation Stock Fund ( S )---------18%-------------38% Bond Fund ( B )----------9----------------32 the correlation between the fund returns is .13 Standard deviation of optimal risky portfolio is 30.92%....
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows: Expected Return Standard Deviation Stock fund (S) 16 % 35 % Bond fund (B) 12 15 The correlation between the fund returns is 0.13. Solve numerically for the proportions of each asset and for...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 5.5%. The probability distribution of the risky funds is as follows:    Expected Return Standard Deviation Stock fund (S) 15% 32% Bond fund (B) 9 23 The correlation between the fund returns is 0.15. Solve numerically for the proportions of each...
What would be the capital allocation between the risk free asset and the optimal risky investment...
What would be the capital allocation between the risk free asset and the optimal risky investment portfolio for an individual with risk aversion coefficient of 3 ? If the initial investment is $100,000, how much money should the investor allocate to each of the 5 assets (risk free asset and 4 risky assets). RF RATE 2% YEARLY Expected Avarage Return optimal investment portfolio in the risky global minimum variance portfolio. Weight Weight PG 0.010848 PG 0.2053 PG 0.336 Microsoft 0.014854...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT