QUESTION 5: a. Sabrina Ip wants to create a portfolio as risky as the market and...

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QUESTION 5: a. Sabrina Ip wants to create a portfolio as risky as the market and she has $1,000,000 to invest. Given this information, fill in the rest of the following table: Investment Asset Chingyi Yu (A) $170,000 Shivana Sanichara (B)$140,000 Wen Cao (C) Joseph Kwan (D) Risk-free asset $130,000 $200,000 Beta 1.6 1.5 1.1 b. Gajalani Ramachandran of Samantha Lo & Janine Clarke Securities observed the following situation: Security Beta Darrell Johnston (A) 1.2 1.8 Expected Return 0.15 0.20 Yi Luo (B) Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk free rate? BONUS QUESTION Imagine you are the professor of this course. Provide ONE question that you would like to include in the final exam of MGFB10 with the solution. If the question will be adopted in exams or assignments in future years, you will receive 2 additional points in the COURSE grade. Note the adopted questions will NOT be used in this year's final exam. Also, please be reminded that it would be a waste of time if you use any previous exam or assignment questions here. You have to come up with NEW problems with INNOVATIVE structures. QUESTION 5: a. Sabrina Ip wants to create a portfolio as risky as the market and she has $1,000,000 to invest. Given this information, fill in the rest of the following table: Investment Asset Chingyi Yu (A) $170,000 Shivana Sanichara (B)$140,000 Wen Cao (C) Joseph Kwan (D) Risk-free asset $130,000 $200,000 Beta 1.6 1.5 1.1 b. Gajalani Ramachandran of Samantha Lo & Janine Clarke Securities observed the following situation: Security Beta Darrell Johnston (A) 1.2 1.8 Expected Return 0.15 0.20 Yi Luo (B) Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk free rate? BONUS QUESTION Imagine you are the professor of this course. Provide ONE question that you would like to include in the final exam of MGFB10 with the solution. If the question will be adopted in exams or assignments in future years, you will receive 2 additional points in the COURSE grade. Note the adopted questions will NOT be used in this year's final exam. Also, please be reminded that it would be a waste of time if you use any previous exam or assignment questions here. You have to come up with NEW problems with INNOVATIVE structures.

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a To create a portfolio as risky as the market Sabrina Ip needs to allocate her investment based on the betas of the assets she plans to include in her portfolio The total beta of the portfolio should ... View the full answer