Question

You have just deposited $10,000 into your TDAmeritrade account with the intent of creating a two-asset...

You have just deposited $10,000 into your TDAmeritrade account with the intent of creating a two-asset portfolio. You have already decided to buy Stock A, which has an expected rate of return of 15% and a standard deviation of 21%. The second asset that you will add to the portfolio is an ETF that tracks treasury bonds. This ETF has an expected rate of return equal to 5% and a standard deviation of 2%. If your goal is to allocate your funds across the two assets to earn an expected portfolio return of 10%, then how much money should you allocate to each security?

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

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
You have just deposited $10,000 into your TDAmeritrade account with the intent of creating a two-asset...
You have just deposited $10,000 into your TDAmeritrade account with the intent of creating a two-asset portfolio. You have already decided to buy Stock A, which has an expected rate of return of 15% and a standard deviation of 21%. The second asset that you will add to the portfolio is an ETF that tracks treasury bonds. This ETF has an expected rate of return equal to 5% and a standard deviation of 2%. If your goal is to allocate...
You invest $10,000 in a complete portfolio. The complete portfolio is composed of a risky asset...
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 $1,700 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $1,700 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 18% and a standard deviation of 25% and a Treasury bill with a rate of return of 9%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 12%.
You invest $1,800 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $1,800 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 15% and a Treasury bill with a rate of return of 4%. ____ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 9%.
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%...
INVESTING YOUR OWN PORTFOLIO You have won the jackpot of a European Lottery with a prize...
INVESTING YOUR OWN PORTFOLIO You have won the jackpot of a European Lottery with a prize of €30 000. After distributing a portion of the prize to a local charity, you decide that it is a good idea to invest the rest of the prize. However, you are doubtful about which asset class or financial vehicle is more suitable given the current international context. Bear in mind that you are in your early twenties and that your financial restrictions are...
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10% and a treasury bill with a rate of return of 5%. What would be the weight of your investment allocated to the risk-free asset if you want to have a portfolio standard deviation of 9%? (2 points) How could you use these two investments to generate an expected return of...
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?
You are creating a portfolio of two stocks. Pear Inc. has expected return of 15% and...
You are creating a portfolio of two stocks. Pear Inc. has expected return of 15% and standard deviation of 30%. InstaCafe Inc. has expected return of 13% and standard deviation of 40%. The two stocks' covariance is -0.036 and the risk free rate is 2%. What percentage of the Optimal Risky Portfolio will be invested in Pear Inc? Provide your answer in percent rounded to two decimals, omitting the % sign.
You must allocate your wealth between two securities. Security 1 offers an expected return of 10%...
You must allocate your wealth between two securities. Security 1 offers an expected return of 10% and has a standard deviation of 30%. Security 2 offers an expected return of 15% and has a standard deviation of 50%. The correlation between the returns on these two securities is 0.25. a. Calculate the expected return and standard deviation for each of the following portfolios, and plot them on a graph: % Security 1 % Security 2 E(R) Standard Deviation 100 0...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT