Suppose that an investor has £1,000,000 to invest in a portfolio containing stocks A, B and a risk-free asset. The investor must invest all her money, and she is using the Capital Asset Pricing Model (CAPM) to make predictions of the expected return-beta relationship. Her objective is to create a portfolio that has an expected return of 14% and which has a beta of 0.75. If stock A has an expected return of 30% and a beta of 1.9, stock B has an expected return of 20% and a beta of 1.4, and the risk-free rate is 8%, how much money will she invest in stock A? Explain your answer and show your calculations.

You want your portfolio beta to be 1.16. Currently, your portfolio consists of $3,000 invested in stock A with a beta of 1.64 and $2,000 in stock B with a beta of 0.75. You have another $5,000 to invest and want to divide it between an asset with a beta of 1.48 and a risk-free asset. How much should you invest in the risk-free asset? Multiple Choice O O O O 1575 1500 225 1230 510

Parts A-C have already been answered, looking for answer D.

Anna holds a portfolio comprising the following 3 stocks: X, Y and Z. Investment  Amount  Beta. Expected return Security X   $2000.  1.3.      Security Y    $1000.   1.       10% Security Z.    $500.     0.       2% a. Determine the expected return of security X. b. Calculate the return of Anna’s portfolio. c. Calculate the beta of Anna’s portfolio. d. To reduce the systematic risk of the portfolio, Anna is considering 3 securities to add to the portfolio. Security A has a beta of 0, security B has a beta of 0.5 and Security C has a beta of -0.3. Discuss which security will be most effective in reducing the portfolio’s systematic risk? How would portfolio expected return change (higher or lower) if you add this security?

d. Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolio’s return? The standard deviation of the market portfolio’s return is 20%. e. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk-free rate of interest is 4%.

An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 2.40, and $50,000 in stock B which has a beta of 0.60. The return on the market is equal to 8% and treasure bonds have a yield of 3% (rRF). What’s the portfolio beta?     0.60     1.30     1.50     1.80  Using the information in Question 41, calculate the required rate of return on the investor’s portfolio     11.0%     15.0%     12.0%     10.5% A retail store is offering a diamond ring for sale for 36 months at $128 per month. The retail price of the ring is $4,000. What is the interest rate on this offer?     9.43%     11.20%     11.98%     12.11%

You want to create a portfolio equally as risky as the market, and you have $1,200,000 to invest. Consider the following information: Asset Stock A Stock B Stock C Risk-free asset What is the investment in Stock C? Investment Investment $300,000 $ 240,000 Investment Beta 0.70 1.10 1.50 What is the investment in risk-free asset?

Nikul

You want to create a portfolio that is​ 80% as risky as the market. You can choose to invest in either Stock B with a beta of 2 or the​ risk-free asset. How much do you invest in Stock​ B?   A. ​40%   B. 50%   C. ​60%   D. 70%

Suppose we have the following information:   Securit Amount Invested Expected Return Beta Stock   A RM1 ,OOO 8% 0.80   Stock B RM2,OOO 12% 0.95   Stock C RM3,OOO 15% 1.10   Stock D RM4,OOO 18%   a) Compute the expected return on this portfolio.    b) Calculate the beta of the portfolio.    c) Does this portfolio have more or less systematic risk than an average asset? Explain.