An investor invests 30% of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70% in a T-bill that pays 6%. His portfolio's expected return and standard deviation are ________ and ____________, respectively. 0.087; 0.06 O 0.295; 0.06 O 0.114; 0.12 0.087; 0.12 O None of the options are correct.

An investor invests 30% of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70% in a T-bill that pays 6%. His portfolio's expected return and standard deviation are and ____, respectively. 0.087; 0.06 O 0.295; 0.06 O 0.114; 0.12 0.087; 0.12 O None of the options are correct.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

An investor invests 75% of his wealth in a risky asset with an expected rate of return of 28% and a standard deviation of 30% and 25% in a treasury bill that pays 3%. What is the EXPECTED RETURN of the combined portfolio of t-bills and the risky asset?
You invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04.What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.11? A. 62.5% and 37.5% B. 53.8% and 46.2% C. Cannot be determined. D. 75% and 25% E. 46.2% and 53.8%
An investor invests 30% of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70% in a T-bill that pays 6%. His portfolio's expected return and standard deviation are __________ and __________, respectively. A. 0.087; 0.06 B. 0.295; 0.06 C. None of the options are correct. D. 0.087; 0.12 E. 0.114; 0.12
Suppose an investor wants to invest $X in a one-month portfolio consisting of ONE risk-free asset and ONE ACTUAL (not synthetic) risky asset. Which of the following statement(s) is (are) FALSE? The investor can invest between 0% and 100% of her funds in the risk free asset The investor can invest 100% of her funds in the risky asset The investor can "short" the risk free asset and use the funds to invest in the risky asset The investor can invest 100% of her funds in the risk free asset The investor can "short" the risky asset and use the funds to invest in the risk-free asset
You have invested $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.11? What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.20? Calculate the slope of CAL. If the degree of risk aversion A=4, what proportion of the money should be invested in risky asset. Sub Parts to be solved
You have invested $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.11? What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.20? Calculate the slope of CAL. If the degree of risk aversion A=4, what proportion of the money should be invested in risky asset.
A portfolio consists of assets with the following expected returns (refer to image): a. What is the expected return on the portfolio if the investor spends an equal amount on each asset? b. What is the expected return on the portfolio if the investor puts 50 percent of available funds in technology stocks, 10 percent in pharmaceutical stocks, 24 percent in utility stocks, and 16 percent in the savings account?
You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.09? Group of answer choices a. 85% and 15% b. 75% and 25% c. 67% and 33% d. 57% and 43%
Two investments, X and Y, have the characteristics shown below. E(X) = $70, E(Y)3D$120, o =7,000, a = 14,000, and ory =7,500 If the weight of portfolio assets assigned to investment X is 0.3, compute the a. portfolio expected return and b. portfolio risk. a. If the weight of portfolio assets assigned to investment X is 0.3, the portfolio expected retum is $ (Type an integer or a decimal.) b. If the weight of portfolio assets assigned to investment X is 0.3, the portfolio risk is approximately $. (Round to two decimal places as needed.)
An investor invests 70% of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04. He also places 30% of his wealth in a T-bill that pays 5%. His portfolio's expected return and standard deviation are __________ and __________, respectively. Group of answer choices 0.120; 0.14 0.087; 0.06 0.295; 0.12 0.087; 0.12 0.895; 0.11
Assume that an investor has formed a portfolio of two assets; Asset A and Asset B. if he invested 30% of his wealth in asset A. If the return on asset A is 20% and the return on asset B is 40%, the weight of the wealth invested in asset B is? What is the portfolio return?
You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.21 and a T-bill with a rate of return of 0.045. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.08? Group of answer choices 50.5% and 49.50% 61.9% and 38.1% 30.1% and 69.9% 60.0% and 40.0% Cannot be determined.