Question

Suppose a risk-free asset has a 3 percent return and a second risky asset has a 15 percent expected return with a standard deviation of 25 percent. Calculate the expected return and standard deviation of a portfolio consisting of 15 percent of the risk-free asset and 85 percent of the second asset. Provide your final answers up to two decimal points

Answer #1

Given that,

Risk free rate Rf = 3%

Expected return on a risky asset Rr = 15%

standard deviation of the asset SDr = 25%

Portfolio consist of Wf = 15% of risk free asset and Wr = 85% of risky asset

So, expected return on the portfolio is weighted average return on its assets

=> Expected return on portfolio E(p) = Wr*Rr + Wf*Rf = 0.85*15 + 0.15*0.03 = 13.20%

Standard deviation of a portfolio with risk free asset is

Standard deviation of portfolio SD(P) = Wr*SDr = 0.85*0.25 = 21.25%

Suppose a risk-free asset has a 3 percent return and a second
risky asset has a 15 percent expected return with a standard
deviation of 25 percent. Calculate the expected return and standard
deviation of a portfolio consisting of 15 percent of the risk-free
asset and 85 percent of the second asset. Provide your final
answers up to two decimal points

Question 4
Suppose a risk-free asset has a 3 percent return and a second
risky asset has a 15 percent expected return with a standard
deviation of 25 percent. Calculate the expected return and standard
deviation of a portfolio consisting of 15 percent of the risk-free
asset and 85 percent of the second asset.

Suppose that the risk-free rate is 6 percent and the
expected return on the market portfolio is 15
percent. An investor with $1.5 million to invest wants to achieve a
25 percent return on a
portfolio combining the risk-free asset and the market portfolio.
Calculate how much this
investor would need to borrow at the risk-free rate in order to
establish this target expected
return. Provide your final answers up to two decimal points.

Suppose that the risk-free rate is 6 percent and the expected
return on the market portfolio is 15 percent. An investor with $1.5
million to invest wants to achieve a 25 percent return on a
portfolio combining the risk-free asset and the market portfolio.
Calculate how much this investor would need to borrow at the
risk-free rate in order to establish this target expected return.
Provide your final answers up to two decimal points.

Suppose that the risk-free rate is 6 percent and the expected
return on the market portfolio is 15 percent. An investor with $1.5
million to invest wants to achieve a 25 percent return on a
portfolio combining the risk-free asset and the market portfolio.
Calculate how much this investor would need to borrow at the
risk-free rate in order to establish this target expected return.
Provide your final answers up to two decimal points

The expected return on the risky portfolio is 15%. The risk-free
rate is 5%. The standard deviation of return on the risky portfolio
is 22%. Tina constructed a complete portfolio from this risky
portfolio and the risk-free asset. If her portfolio has an expected
return of 12%, what is the standard deviation of her complete
portfolio?

You have one risk-free asset and one risky stock in your
portfolio. The risk-free asset has an expected return of 5.8
percent. The risky stock has a beta of 1.8 and an expected return
of 12.3 percent. What's the expected return on the portfolio if the
portfolio beta is .958?

The CAL has the following parameters:
Risk-free rate is 3 percent, return on the
optimal risky portfolio is 12 percent,
with a standard deviation (SD) of 20 percent.
a) What is your expected return if you
limit your risk to a Standard Deviation of 10 percent?
b) How do you achieve a 35 percent
return using the parameters above? Explain and show
precisely how you would achieve the return and also calculate the
standard deviation of the portfolio.

There are 2 investment -- a risk-free security that returns 2%
and a risky asset that has expected return of 10% and standard
deviation of 18%.
1). What are the weights of the complete portfolio that has an
8% expected return?
2). What is the standard deviation of that portfolio?
3). If the portfolio is valued at $100,000, how much do you
invest in the risk-free security and how much do you invest in the
risky asset?

The return on the risky portfolio is 15%. The risk-free rate, as
well as the investor's borrowing rate, is 10%. The standard
deviation of return on the risky portfolio is 20%. If the standard
deviation on the complete portfolio is 25%, how much is the
expected return on the complete portfolio?

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