Question

There are 2 investment -- a risk-free security that returns 2% and a risky asset that...

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?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
security beta Standard deviation Expected return S&P 500 1.0 20% 10% Risk free security 0 0...
security beta Standard deviation Expected return S&P 500 1.0 20% 10% Risk free security 0 0 4% Stock d ( ) 30% 13% Stock e 0.8 15% ( ) Stock f 1.2 25% ( ) 5) A complete portfolio of $1000 is composed of the risk free security and a risky portfolio, P, constructed with 2 risky securities, X and Y. The optimal weights of X and Y are 80% and 20% respectively. Given the risk free rate of 4%....
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP)...
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP) = 12%, σP = 22%, rf= 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 7%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? (Do not round intermediate calculations. Round your...
1.)In a universe with just two assets, a risky asset and a risk-free asset, what is...
1.)In a universe with just two assets, a risky asset and a risk-free asset, what is the slope of the Capital Allocation Line if the Expected return of the risky asset is 12.16% and the standard deviation of the returns of the risky asset is 19.25%. The return on the risk-free asset is 3.88%   2.)Peter Griffin calculates that his portfolio's risk, as measured by the standard deviation, is 21.96%. His portfolio is made up of many stocks from just two...
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP)...
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP) = 14%, σP = 17%, rf = 5%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 6%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? (Do not round intermediate calculations. Round...
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP)...
Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rP) = 16%, σP = 20%, rf = 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to 5%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk-free asset? (Do not round intermediate calculations. Round...
How a risk neutral investor allocates her asset between a risk free security and a risky...
How a risk neutral investor allocates her asset between a risk free security and a risky asset. The risk-free return is 5% and the return of the risky asset is 7% with a standard deviation of 4%.
1. Suppose you have a portfolio that is 70% in the risk-free asset and 30% in...
1. Suppose you have a portfolio that is 70% in the risk-free asset and 30% in a stock. The stock has a standard deviation of 0.30 (i.e., 30%). What is the standard deviation of the portfolio? A. 0.30 (i.e., 30%) B. 0.09 (i.e., 9%) C. 0.21 (i.e., 21%) D. 0 2. You have a total of $100,000 to invest in a portfolio of assets. The portfolio is composed of a risky asset with an expected rate of return of 15%...
The expected return on the risky portfolio is 15%. The risk-free rate is 5%. The standard...
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?
An investor can choose to allocate her investment into a risky portfolio and the risk-free rate....
An investor can choose to allocate her investment into a risky portfolio and the risk-free rate. The risky portfolio has an expected return of 18.3 percent and a standard deviation of 21.0 percent. The risk-free rate is 8.4 percent. The investor targets a complete portfolio with an expected return of 14 percent. The standard deviation of this complete portfolio is
Design a complete portfoilio with the Risky asset S and risk free asset that yields the...
Design a complete portfoilio with the Risky asset S and risk free asset that yields the expected return of 10%. What is the weight you invest on Asset S? Asset S: E(r)=15% Standard Deviation=20% Risk free: E(r)= 6% A. 44.4 B.37.9 C.50.6 D. 41.09
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT