You will have a portfolio that is only comprised of two assets. You plan to allocate...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You will have a portfolio that is only comprised of two assets. You plan to allocate 48.6% into asset A, which has an expected return of 12.9%. The remainder of your portfolio will be allocated to asset B, which has an expected return of 5.2%. What is your expected return on this two-asset portfolio? State your answer as a percentage with two decimal places and not in decimal form (i.e, 13.21, not 0.1321). The risk-free rate is 1.59%, a stock's adjusted systematic risk exposure is 0.99, and the market risk premium is 5.23%. If the expected return for this stock is 7.31%, then what is the estimated alpha according to the Capital Asset Pricing Model? State your answer as a percentage with two decimal places and not in decimal form (i.e, 13.21, not 0.1321). You will have a portfolio that is only comprised of two assets. You plan to allocate 48.6% into asset A, which has an expected return of 12.9%. The remainder of your portfolio will be allocated to asset B, which has an expected return of 5.2%. What is your expected return on this two-asset portfolio? State your answer as a percentage with two decimal places and not in decimal form (i.e, 13.21, not 0.1321). The risk-free rate is 1.59%, a stock's adjusted systematic risk exposure is 0.99, and the market risk premium is 5.23%. If the expected return for this stock is 7.31%, then what is the estimated alpha according to the Capital Asset Pricing Model? State your answer as a percentage with two decimal places and not in decimal form (i.e, 13.21, not 0.1321).
Expert Answer:
Answer rating: 100% (QA)
To calculate the expected return on a twoasset portfolio with 486 allocated to a... View the full answer
Related Book For
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
Posted Date:
Students also viewed these finance questions
-
An investment has an expected return of 12 percent per year with a standard deviation of 6 percent. Assuming that the returns on this investment are at least roughly normally distributed, how...
-
The market portfolio has an expected return of 12 percent and a standard deviation of 22 percent. The risk-free rate is 5 percent. a. What is the expected return on a well-diversified portfolio with...
-
An investment has an expected return of 7 percent per year with a standard deviation of 3.5 percent. Assuming that the returns on this investment are at least roughly normally distributed, how...
-
Which of the following quadratic equations is in standard form? (a) x 2 7x = 5 (b) 9 = x (c) (x + 5)(x - 4) = 0 (d) 0 = 5x - 6x - 1
-
DeLong Industrial Supply Company sells artistic supplies to retailers in three different states'North Carolina, South Carolina, and Georgia. The following profit analysis by state was prepared by the...
-
Eastern Cola is considering the purchase of a special-purpose bottling machine for $70,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager...
-
Distinguish between a material inherent uncertainty and a fundamental inherent uncertainty and explain how each is reflected in the auditor's report.
-
Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck...
-
The controller of Rather Production has collected the following monthly expense data for analyzing the cost behavior of electricity costs. Total Electricity Costs Total Machine Hours January $2,500...
-
Is the mean or the median more likely to provide a better measure of typical sales revenue for companies included in the Fortune 500?
-
9) In this question, we will derive the formulas of an annuity reviewed in class. For a finite geometric series, the sum S = + ar + ar + ... + rn 1 (Equ 1) can be written as S = a(1777), where r is...
-
Factor completely; simplify if possible. 9r2+24r +16=
-
Simplify. 81 49 Be sure to write your answer in sim
-
Factor completely. 12x5-27x
-
Let A == [1 4 matrices A and 2 a 31 and B = 6 2 For what values of a (if any) do B commute?
-
Subtract and simplify: 2x +4 10x1 9 9
-
Cemre owns a firm that uses labour (L) and capital (K) to sell widgets (Y). according to the following production function: Y = F(L,K) = In (L) + In(K) Cemre buys her factors and sells her output in...
-
What kind of rays are X-rays?
-
An analyst gathered the following year-end price level data for an economy: 2010...................... 174.0 2014...................... 190.3 2015...................... 196.8 What is the economys...
-
Mr. Wall believes he understands the relationship between interest rates and straight bonds but is unclear how callable bonds change as interest rates increase. How do prices of callable bonds react...
-
Given the information below for Seger Corporation, compute the expected share price at the end of 2017 using price ratio analysis. Assume that the historical average growth rates will remain the same...
-
You must filter $1000 \mathrm{lb}_{\mathrm{m}} / \mathrm{min}$ of an aqueous slurry containing $40 %$ solids by weight using a rotary drum filter with a diameter of $4 \mathrm{~m}$ and a length of $4...
-
Calculate the flow rate of water (in gpm) required to fluidize a bed of 1/16 in. diameter lead shot $(S G=11.3)$. The bed is $1 \mathrm{ft}$ in diameter, $1 \mathrm{ft}$ deep, and has a porosity of...
-
A coal gasification reactor operates with particles of $500 \mu \mathrm{m}$ diameter and a density of $1.4 \mathrm{~g} / \mathrm{cm}^{3}$. The gas may be assumed to have properties of air at...
Study smarter with the SolutionInn App