Based on the information, what would the expected portfolio standard deviation be? Symbol Estimated Beta Standard Deviation
Fantastic news! We've Found the answer you've been seeking!
Question:
Symbol | Estimated Beta | Standard Deviation | Weight |
SPY | 1 | 13% | 15% |
IWM | 1.15 | 16.50% | 20% |
EFA | 1.03 | 15% | 20% |
EEM | 1.09 | 20% | 20% |
NFLX | 1.57 | 42.2% | 25% |
*NFLX Standard Deviation Taken From Week 2 Assignment
Expected Portfolio Return/Recommendation:
The CAPM model expected returnfor each stock formula = Risk-free rate + Beta x (Market Return - Risk-free rate). 3.5% and 13.5%
3.5% + 1(13.5%-3.5%) = 13.5% = SPY Expected Return
3.5% + 1.15(13.5%-3.5%) = 15% = IWM Expected Return
3.5% + 1.03(13.5%-3.5%) = 13.8% = EFA Expected Return
3.5% + 1.09(13.5%-3.5%) = 14.4% = EEM Expected Return
3.5% + 1.57(13.5%-3.5%) = 19.2% = NFLX Expected Return
13.5% + 15% + 13.8% + 14.4% + 19.2% / 5 = 8.85% = Expected Portfolio Return
Related Book For
Posted Date: