Assume that both portfolios A and B are well diversified, that E( rA) = .12, and E(

Question:

Assume that both portfolios A and B are well diversified, that E( rA) = .12, and E( rB) = .09. If the economy has only one factor, and ßA = 1.2 whereas ßB = .8, what must the risk- free rate be?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Investments

ISBN: 978-0071338875

8th Canadian Edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus, Stylianos Perrakis, Peter

See More Books

Question Posted: Jun 21, 2015 03:39 AM

See More Questions

Assume that both portfolios a and b are well diversified? that E(rA)=12% and E(rB)=9%. If the economy has only one factor and beta=1.2 whereas beta=.8, what must be the risk-free rate?
Assume that both portfolios A and B are well diversified, that E(rA) = 12%, and E(rB) = 9%. If the economy has only one factor, and A = 1.2, whereas B = .8, what must be the risk-free rate?
Assume both portfolios A and B are well diversified, that E(rA) = 14% and E(rB) = 14.8%. If the economy has only one factor, and A = 1 while B = 1.1, what must be the risk-free rate?
Suppose that in a wave of pessimism, housing prices fall by 10% across the entire economy. a. Has the stock of real assets of the economy changed? b. Are individuals less wealthy? c. Can you...
Discuss how you might use business analytics in your personal life, such as managing your grocery purchasing, automobile maintenance, budgeting, sports, and so on. Be creative in identifying...
Use recursion to implement a method public static boolean find(String text, String str) that tests whether a given text contains a string. For example, find("Mississippi", "sip") returns true. Hint:...
What are the disadvantages of nonprobability sampling techniques?
Calculating Discounted Payback An investment project has annual cash inflows of $6,500, $7,000, $7,500, and $8,000, and a discount rate of 14 percent. What is the discounted payback period for these...
What I learnt? Customer Behaviour: 1) Customer satisfaction only results in loyalty at the highest level of satisfaction - do not focus entirely on satisfaction 2) Improvements that are not...
There is a lottery with n coupons and n people take part in it. Each person picks exactly one coupon. Coupons are numbered consecutively from 1 to n, n being the maximum ticket number. The winner of...
The following is scenario for three stocks constructed by the security analysts of Pf Inc. Construct an arbitrage portfolio using these stocks. Scenario Rate of Return (%) Stock Price (S) Rcssio...
Derive a more general (than the numerical example in the chapter) demonstration of the APT security market line a. For a single- factor market b. For a multifactor market
Chain AB supports a horizontal, uniform steel beam having a mass per unit length of 85 kg/m. If the maximum tension in the cable is not to exceed 8kN, determine (a) The horizontal distance a from A...
A company has restructured around teams but performance has not met expectations. What should be the main evaluation criterion in an appropriate performance evaluation for supporting and improving...
Ten sixth-grade students at a school were each asked five survey questions. Their answers to each question are shown here. 0 1 3 0 0 0 2 1 1 data set A data set B data set C 12 12 12 12 12 12 12 12 6...
Prove that every 2 x 2 orthogonal matrix A over R can be written in one of the forms sin 0 9). ( depending on whether A has determinant 1 or -1. - sin cos cos - sin cos sin o). -cos 0
Check that cos 0/2 sin 0/2 sin 6/2 cos 0/2 are eigenvectors with the eigenvalues 1 and -1 for the matrix U= and v= coso sin o sino-cos o
(a) Determine whether the following argument is valid: Pr qr -(pv q) ..r (b) Determine whether the following argument is valid: - qr q Vr :. P
Rectify the following errors assuming that suspense account was opened. Ascertain the difference in trial balance. (a) Depreciation provided on machinery 4,000 was not posted to Depreciation...
Write an SQL statement to display all data on products having a QuantityOnHand greater than 0.
Your traditional IRA account has stock of GFH, which cost $2,000 20 years ago when you were 50 years old. You have been very fortunate, and the stock is now worth $23,000. You are in the 35 percent...
You are 60 years old. Currently, you have $10,000 invested in an IRA and have just received a lump-sum distribution of $50,000 from a pension plan, which you roll over into an IRA. You continue to...
Bob places $1,000 a year in his IRA for ten years and then invests $2,000 a year for the next ten years. Mary places $2,000 a year in her IRA for ten years and then invests $1,000 a year for the next...
do not use chatgpt or any other ai tool. A monopolist with a linear demand curve will have a marginal revenue curve with intercept and slope as the demand curve..
7. Consider the figure below. HO -C pka-COOH-2.19 pka-NH2 = 9.67 pka-sidechain 4.25 CHCH2C OH a. What amino acid is this? (1) b. Is it in the R or S configuration? (2) c. Draw the three forms of the...
2. Draw the structure of the missing major organic product(s) or reactant(s) in each of the transformations below including showing stereochemistry when appropriate. For reactions that produce an...

Assume that both portfolios A and B are well diversified, that E( rA) = .12, and E(

Question:

Step by Step Answer:

Substituting the portfolio return and the betas in t...View the full answer

Investments

Students also viewed these Accounting questions