You are thinking about a portfolio where you put half your money in stock A and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are thinking about a portfolio where you put half your money in stock A and half your money in the risk free asset (like a Treasury bill). The risk free asset has a return of 5%. a. What is the variance and standard deviation of the risk free asset? You are thinking about a portfolio where you put half your money in stock A and half your money in the risk free asset (like a Treasury bill). The risk free asset has a return of 5%. a. What is the variance and standard deviation of the risk free asset?
Expert Answer:
Answer rating: 100% (QA)
Since the riskfree asset has a fixed return its variance is zero This is bec... View the full answer
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
Posted Date:
Students also viewed these accounting questions
-
The typical standard deviation of the annual return on a stock is 20% and the typical mean return is about 12%. The typical correlation between the annual returns of two stocks is about 0.25. Mutual...
-
Theres a piece of land (0.44 acres) on sale just off Kennedy Blvd, and you are thinking about buying the land, developing it into an office building and eventually selling it. The seller of the land...
-
The return on a portfolio during a period is defined by PVend Pvbeg / PVbeg Where PVbeg is the portfolio value at the beginning of a period and PVend is the portfolio value at the end of the period....
-
How would this photo be different if the two people were both Americans?
-
Write an equation showing the formation of each of the following from the appropriate bromide: (a) Isopropenyllithium (b) sec-Butyllithium
-
At the Fermi National Accelerator Laboratory (Fermilab) in Illinois, protons are accelerated around a ring 2 km in radius to speeds that approach that of light. The energy for this is stored in...
-
Foreign Exchange Market Characteristics. With reference to foreign exchange turnover in 2013, rank the following: a. The relative size of spot, forwards, and swaps b. The five most important...
-
Refer to the Real Estate data, which report information on homes sold in the Goodyear, Arizona, area during the last year. a. The mean selling price (in $ thousands) of the homes was computed earlier...
-
A boat travels on a course of bearing N 53 50' W for 81.4 miles. How many miles north and how many miles west has the boat traveled? Round at least to the nearest tenth of a mile. Miles North: Miles...
-
Citigroup Inc. (Citi) is a leading global financial services company with over 200 million customer accounts and operations in more than 140 countries. Its operating units Citicorp and Citi Holdings...
-
The payout ratio is calculated by dividing a . dividends per share by earnings per share and dividing cash dividends by net income less preferred dividends. b . dividends per share by earnings per...
-
Ocean Park Properties is evaluating a real estate investment of Lakeview Estates. Management plans to buy the property today and sell it 5 years from today. The initial cost of the property is $5...
-
Find (and reference) as least one source describing what fintech is and summarize it, including how it differs from traditional financial companies. Find (and reference) some information on risk...
-
You are the department manager. You are thinking about having an end-of-year Christmas celebration to acknowledge your team's hard efforts and contributions. You have only just taken over the...
-
Ayam Company makes plastic dog carriers. The manufacturing process is highly automated and the machine time needed to make any size crate is approximately the same. Ayam's management decides to begin...
-
Describe a common and measurable collaborative goal. This is not an individual goal; it is a group goal. This can be a goal the group is already working on at work, at school, or at home. The group...
-
. U.S. Dollar-Euro. The table, , indicates that a 1-year call option on euros at a strike rate of $1.2502 = (1.00 will cost the buyer $0.0548 per E, or 4.33%. But that assumed a volatility of...
-
What is the difference between the straight-line method of depreciation and the written down value method? Which method is more appropriate for reporting earnings?
-
Use @RISK to draw a binomial distribution that results from 50 trials with probability of success 0.3 on each trial, and use it to answer the following questions. a. What are the mean and standard...
-
Recall from Chapter 2 that the file Supermarket Transactions.xlsx contains over 14,000 transactions made by supermarket customers over a period of approximately two years. For this problem, consider...
-
A real estate agent has collected a random sample of 75 houses that were recently sold in a suburban community. She is particularly interested in comparing the appraised value and recent selling...
-
In the previous question, the Australian interest rates increased from 6 to 11 percent. According to the IFE, what is the underlying factor that would cause such a change? Give an explanation based...
-
Forecasting the Future Spot Rate Based on IFE. Assume that the spot exchange rate of the Singapore dollar is $.70. The 1-year interest rate is 11 percent in the United States and 7 percent in...
-
Assume that the nominal interest rate in Mexico is 48 percent and the interest rate in the United States is 8 percent for 1-year securities that are free from default risk. What does the IFE suggest...
Study smarter with the SolutionInn App