Question: Consider the table below showing return and risk for two investment funds. Mutual Funds Returns Standard Deviation Fund A : A well diversified stock fund

Consider the table below showing return and risk for two investment funds.

Mutual Funds

Returns

Standard Deviation

Fund A : A well diversified stock fund

8%

17%

Fund B: A risk-free fund consisting entirely of Treasury bills

3.5%

0%

2.A Calculate the return for a portfolio consisting of 70 % in fund A, and 30% in fund B. Show calculations

2.B Calculate the standard deviation for a portfolio consisting of 70 % in fund A, and 30%

in fund B. Show calculations

2.C Calculate the return for a portfolio consisting of 130 % in fund A in the context of CAPM. Show calculations

2.D Calculate the standard deviation for a portfolio consisting of 130 % in fund A in the context of CAPM. Show calculations 

Step by Step Solution

★★★★★

3.51 Rating (151 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Answer 2A Return for a portfolio consisting of 70 in fund A and 30 in fund B 07 8 03 35 71 An... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Using the plurality method, which restaurant is chosen? The members of the Student Council at Ohio State University are planning to go out to dinner following an upcoming meeting. The restaurant...

Q:

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...

Q:

Refer to Table 10.1 in the text and look at the period from 1973 through 1978. a. Calculate the arithmetic average returns for common stocks and T-bills over this period. b. Calculate the standard...

Q:

Consider the table below showing the supply schedules for three competitive firms, each producing honey. These three firms make up the entire industry. a. Compute the total industry supply at each...

Q:

A summary of the balance sheet of Travelers Inn Inc. (TII), a company which was formed by merging a number of regional motel chains and which hopes to rival Holiday Inn on the national scene, is...

Q:

Cost System Choices, Budgeting, and Variance Analyses for Sacred Heart Hospital The purpose of this integrated exercise is to demonstrate how a change in the cost systems allocation base can result...

Q:

A population of college students is taking an advanced math class. In the class are three juniors and two seniors. Using numbers 1, 2, and 3 to represent juniors and 4 and 5 to represent seniors,...

Q:

Consider the following diagram showing monthly market demand for electricity, where t electricity is generated by burning coal. The mining, processing, and burning of coal have consider able...

Q:

The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear...

Q:

To assess the effectiveness of a new workplace safety awareness program, five employees at Potemkin Realty were randomly chosen. Before they participate in the awareness program, the five workers are...

Q:

Question 3 - Week 4 (95) (7 marks) Kool Inc. uses a weighted-average process costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast,...

Q:

The premise of this estimating technique in construction, industrial, and process projects is that there is a linear relationship between the cost and duration of the project and one or more of the...

Q:

A car manufacturer incurs the following costs. Classify each cost as either a product or period cost. If a product cost, classify it as direct materials, direct labor, or factory overhead. If a...

Q:

Try to determine the required rate of return on king farm corporation's common stock. The firm's beta is 1.82. The rate on a 10-year Treasury bond is 3.63 percent, and the market risk premium is 6.53...

Q:

help!!!! Financial Statements Wilhelm Kohl started a business in May 20-- called Kohl's Home Repair The trial balance and analysis of the change in owner's equity for the month of May are shown....

Q:

1/ Paula, a former actress, spends all her income attending plays and movies and likes plays exactly three times as much as she likes movies. Draw her indifference map. Paula has $120/wk budget for...

Q:

The table below shows a 2pway set associative cache. What is the maximum size of the memory in Kbytes? a. 16 b. 64 c. 32 d. 10 e. 4 f. 1 g. 2 h. 8

Q:

(a) Prove that form an orthonormal basis for R3 for the usual dot product. (b) Find the coordinates of v = (1, 1, 1)T relative to this basis. (c) Verify formula (5.5) in this particular case. 48-65...

Q:

Art galleries, museums, roads, and bridges are usually provided by the government. a. Explain why uncrowded goods of this sort should have a price of zero if allocative efficiency is to be achieved....

Q:

This question is based on the section The Long-Run Industry Supply Curve found on this book's MyEconLab (www.myeconlab.com). A major theme of this chapter is the role that free entry and exit play in...

Q:

The European Union has a system for tradable permits' for the emission of greenhouse gases. The authorities initially set the cap on emiss.ons at a level that was expected to generate a permit price...

Q:

Can taxable corporations use the cash method of accounting? Explain.

Q:

How does a corporation compute its minimum tax credit? How does a minimum tax credit benefit a corporation?

Q:

What is the conceptual difference between adjustments and preference items for AMT purposes?