Calculate the expected return andstandard deviation of a portfolio invested in the following two risky assets.

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....

Use the following information to calculate the expected return and standard deviation of a portfolio that...

Use the following information to calculate the expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 3 Doors, Inc. Down Co. Expected return, E(R) 11 % 10 % Standard deviation, σ 31 33 Correlation .16

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?

Use the following information to calculate the expected return and standard deviation of a portfolio that...

Use the following information to calculate the expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Inc., and 50 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 3 Doors, Inc. Down Co. Expected return, E(R) 19 % 14 % Standard deviation, σ 49 51 Correlation .34

You manage a risky portfolio with expected rate of return of 9% and standard deviation of...

You manage a risky portfolio with expected rate of return of 9% and standard deviation of 13%. Risk free rate of return is 3%. a. What are the characteristics of feasible investment portfolios for your client? (what are the possible risk and return that you can create?) Identify this using a graph. What is this line called? b. A client of yours has a utility function of U=E(r)-4Var(r) and 10000 to invest. How much should he invest in the risk-free...

In a universe with four risky assets the market portfolio is comprised of an equally weighted...

In a universe with four risky assets the market portfolio is comprised of an equally weighted combination of those assets. This market portfolio has an expected return of 8% and a variance of 12%. Assume, that in addition a risk-free asset with return of 1% exists. What percentage of each risky asset will an investor with Utility function U(r) = E(r) – 0.4 var(r) hold in his portfolio? 18% 20% 27% 30%

You have the following assets available to you to invest in: Asset Expected Return Standard Deviation...

You have the following assets available to you to invest in: Asset Expected Return Standard Deviation Risky debt 6% 0.25 Equity 10% .60 Riskless debt 4.5% 0 The coefficient of correlation between the returns on the risky debt and equity is 0.72 2D. Hector has a coefficient of risk aversion of 1.8. What percentage of his assets should he invest in the risky portfolio? 2E. What would the expected return be on Hector’s portfolio? 2F. What would the standard deviation...

The annual expected return of the risky portfolio is 8%, the annual volatility of the risky...

The annual expected return of the risky portfolio is 8%, the annual volatility of the risky portfolio is 20%, and the risk-free rate is 3%. If your utility is described as U = E(r) - 1/2 * A * vol^2 and your annual risk-aversion A = 4, what is your utility value for the portfolio that has 25% in the risky asset?

An investor can design a risky portfolio based on two stocks, A and B. Stock A...

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5%. The correlation coefficient between the returns of A and B is .50. The risk-free rate of return is 10%. The proportion of the optimal risky portfolio that should be invested in stock A is...

The expected return and standard deviation of a portfolio that is 50 percent invested in 3...

The expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Inc., and 50 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) 19 % 14 % Standard deviation, σ 62 24 What is the standard deviation if the correlation is +1? 0? −1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. )