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- Consider two assets (1 & 2) with the following information:E (R1) = 10 %, σ1 = 10 %, E (R2) = 12 %, σ2 = 18 %, If a portfolio consists of 55-45 weights in assets 1 and 2 respectively, what is portfolio’sexpected return and risk if the correlation between the return on assets 1 and 2 is -0.20?Two assets A and B have the following risk and return characteristics RA =22% ; RB = 20% ; = 15% ; =18% ; r (correlation coefficient) = -1 Determine the minimum risk portfolio weights for A and B.Consider the following information for four portfolios, the market, and the risk-free rate (RFR): Portfolio Return Beta SD A1 0.15 1.25 0.182 A2 0.1 0.9 0.223 A3 0.12 1.1 0.138 A4 0.08 0.8 0.125 Market 0.11 1 0.2 RFR 0.03 0 0 Refer to Exhibit 18.6. Calculate the Jensen alpha Measure for each portfolio. a. A1 = 0.014, A2 = -0.002, A3 = 0.002, A4 = -0.02 b. A1 = 0.002, A2 = -0.02, A3 = 0.002, A4 = -0.014 c. A1 = 0.02, A2 = -0.002, A3 = 0.002, A4 = -0.014 d. A1 = 0.03, A2 = -0.002, A3 = 0.02, A4 = -0.14 e. A1 = 0.02, A2 = -0.002, A3 = 0.02, A4 = -0.14
- 1. Determine the expected return and the variance of the portfolio formed by the two assets S₁, S₂ with weights ₁ = 0.6, x2 = 0.4. The assets returns are described by the following scheme: scenario W1 2لا W3 probability 0.1 0.4 0.5 T1 -20% 0% 20% 12 -10% 20% 40%Given: Expected return Share A(ȓA) =15% Expected return Share B (ȓB) = 15% Expected return Portfolio A and B (ȓAB) = 15% By using the above information, demonstrate the rate of risk (variance and standard deviation) for each of: (i) Share A (ii) Share B (iii) Portfolio A and B3. Consider three stocks A, B and C and a market index M with the following prices: Year TO T1 T2 T3 A 85 108 110 125 B 12 14 13 15 C 50 60 70 75 M 1128 1435 1578 1786 The risk-free rate equals 4%. a. Compute the expected return and risk on each stock and the market index. b. Construct the matrix of variances and covariances between these assets. c. Construct the matrix of the correlation coefficients. d. Compute the beta coefficients of these companies and the expected return at equilibrium. e. Construct the minimum risk portfolio P1 composed of A and C. Compute the expected return and risk on this portfolio. f. Construct a portfolio P2 composed of A, B and C in proportions of 20%, 30% and 50%. Compute the expected return and risk on this portfolio. What is the contribution of each security to the return and risk pf this portfolio? g. Construct an equally weighted portfolio P3 composed of A, B, C and the risk-free rate. Compute the beta coefficient and position this portfolio with…
- You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: Portfolio Y Z Market Risk-free Rp 16.00% бр 32.00% 15.00 27.00 7.30 17.00 11.30 5.80 22.00 0 Bp 1.90 1.25 0.75 1.00 0 Assume that the tracking error of Portfolio X is 13.40 percent. What is the information ratio for Portfolio X? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places. Information ratioWhat is the total risk of portfolio as per Sharpe's Single Index Model if standard deviation of market is 20 % , beta of portfolio is 1.27, unsystematic risk in variance term of the portfolio is 107 a. 752.16 b. 400 c. 107 d. 626The following table provides information relating to Omega Ltd, as well as the market portfolio. The risk-free rate of return is 3.4% . Asset Excess Return Variance Beta Omega 12% 0.021904 1.4 M 8.1% 0.010201 1 What is Omega's M2 value? a. 7.41% b. 11.59% c. 8.99% d. 9.27% What is Omega's Sharpe Ratio? a. 0.061 b. 0.811 c. 0.086 d. 0.581 please explain the calculation step by step
- You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset: Op 1.45 1.20 0.75 1.00 Portfolio: X Y Z Market Risk-free Rp 11.00% 10.00 8.10 10.40 5.20 Information ratio Op 33.00% 28.00 18.00 23.00 0 Assume that the tracking error of Portfolio X is 9.10 percent. What is the information ratio for Portfolio X? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places. 02148 01. Given the following summary statistics, Mean S.D. 1.235 0.997 Asset A 0.52 Asset B. 0.44 (a) If the correlation between the two financial series is 0.25. What are the optimal portfolio weights to minimize risk? (b) What are the expected return and standard deviation of the optimal port- folio? (c) Compute the 1% Value-at-Risk for the next 5 days (d) Compute the expected shortfallAn optimal risk portfolio’s expected return is 14%, standard deviation is 22%. If risk-free rate is 6%, then what would be slope of the best CAL? A) 0.64B) 0.14C) 0.08D) 0.33E) 0.36