Question: CAPM Inputs: Market Return 9% Risk-free Rate 0.75% Client A Investment Amount $45,000 Client A High Risk - Need for growth and more savings in

CAPM Inputs:

Market Return 9%

Risk-free Rate 0.75%

Client A

Investment Amount $45,000

Client A High Risk - Need for growth and more savings in bank.

Asset Allocation. Stocks 40%, Mutual funds 15%, ETF 35% Bonds 10%

Symbol

Asset Allocation

Beta

Return

Standard Deviation

ORCL

5%

1.1

?

16.00%

MMM

5%

0.98

?

14.00%

NFLX

8%

1.57

?

45.00%

BMY

8%

.78

?

28.00%

BIG

5%

1.04

?

32.00%

AKAM

7%

1.34

?

37.00%

GE

2%

1.12

?

16.00%

SPY

10%

1

?

11.00%

IWM

9%

1.15

?

18.00%

EFA

7%

1.03

?

15.00%

EEM

9%

1.09

?

19.00%

TLT

10%

-0.48

?

13.50%

SHY

15%

0

?

1%

Please show all calculations

Calculate the rate of return for each stock?.

For each portfolio, calculate the expected portfolio return using the CAPM (beta) model.

What is the expected portfolio return ______________?

For each portfolio, calculate the expected portfolio standard deviation.

What is the standard deviation for the portfolio _____________?

Client B

Moderately Aggressive Investor

Need for growth, savings and cash flow.

Asset Allocation: Stocks 45%, mutual funds 15%, Bonds 30%

ETF 10%.

Symbol

Asset Allocation

Beta

Return

Standard Deviation

IBM

8%

0.86

?

20.00%

ORCL

5%

1.1

?

16.00%

MMM

4%

0.98

?

14.00%

EFA

4%

1.03

?

15.00%

NFLX

9%

1.57

?

45.00%

BIG

5%

1.04

?

32.00%

AKAM

3%

1.34

?

37.00%

GE

2%

1.12

?

16.00%

SPY

15%

1

?

11.00%

IWM

10%

1.15

?

18.00%

HYG

10%

0.38

?

8.00%

TLT

10%

-0.48

13.00%

SHY

5%

0

1.00%

Please show all calculations. Thanks so much.

Calculate the rate of return for each stock.

For each portfolio, calculate the expected portfolio return using the CAPM (beta) model.

What is the expected portfolio return ______________?

For each portfolio, calculate the expected portfolio standard deviation.

What is the standard deviation for the portfolio _____________?

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