Assume the price of a Schwab Small-Cap index fund is $45 per share, the annual expected...

 

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Assume the price of a Schwab Small-Cap index fund is $45 per share, the annual expected return is 16%, and the annual standard deviation is 0.25. Assume you have $10,000 of investment equity and that you want to buy the Schwab Small-Cap fund using your money and some of the broker's money such that your total expected annual return on your portfolio is 22%. Assume you can borrow at 7% annually. What is the portfolio weight in the Small-Cap index fund such that the expected return on your portfolio is 22%? Assume the price of a Schwab Small-Cap index fund is $45 per share, the annual expected return is 16%, and the annual standard deviation is 0.25. Assume you have $10,000 of investment equity and that you want to buy the Schwab Small-Cap fund using your money and some of the broker's money such that your total expected annual return on your portfolio is 22%. Assume you can borrow at 7% annually. What is the portfolio weight in the Small-Cap index fund such that the expected return on your portfolio is 22%?

Answer rating: 100% (QA)

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