# Question

You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings:

a. What is the beta on each portfolio?

b. Which portfolio is riskier?

c. If the risk-free rate of interest were 4 percent and the market risk premium were 5 percent, what rate of return would you expect to earn from each of theportfolios?

a. What is the beta on each portfolio?

b. Which portfolio is riskier?

c. If the risk-free rate of interest were 4 percent and the market risk premium were 5 percent, what rate of return would you expect to earn from each of theportfolios?

## Answer to relevant Questions

If the risk-free rate of return is 4 percent and the expected rate of return on the market portfolio is 10 percent.a. Graph the security market line (SML). Also, calculate and label the market risk premium on the graph.b. ...After looking at a fixed-rate loan, Ace-Campbell Mfg. entered into a floating-rate loan agreement. This loan is set at 40 basis points (or .40 percent) over an index based on LIBOR. Ace-Campbell is concerned that the LIBOR ...A 20-year Fitzgerald bond pays 9 percent interest annually on a $1,000 par value. If the bond sells at $945, what is the bond’s yield to maturity? What would be the yield to maturity if the bond paid interest semiannually? ...The 15-year, $1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market price of the bond is $1,085, and the market’s required yield to maturity on a comparable-risk bond is 10 percent.a. Compute ...If Pepperdine, Inc.’s return on equity is 16 percent and the management plans to retain 60 percent of earnings for investment purposes, what will be the firm’s growth rate?Post your question

0