our client has $200 million to invest in stocks. Half of that is their own capital and
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- our client has $200 million to invest in stocks. Half of that is their own capital and the rest will be borrowed at 3%, the risk-free rate. The following four assets are on the efficient frontier and annual expected return and risk are:
Return | Standard Deviation | |
Mid Cap | 15.0% | 15.5% |
Large Cap | 15.5% | 13.5% |
Value Stocks | 14.5% | 13.0% |
Growth Stocks | 17.0% | 18.5% |
What is the maximum return, your client can expect to earn over the year, if they want their investment to be on the Capital Allocation Line?
Related Book For
Quantitative Analysis for Management
ISBN: 978-0132149112
11th Edition
Authors: Barry render, Ralph m. stair, Michael e. Hanna
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