You can invest your money either in risk-free government bonds that yield 3% per year, or...
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You can invest your money either in risk-free government bonds that yield 3% per year, or you can buy a well-diversified index fund that has an expected return of 10% and a standard deviation of 25%. Since the index fund resembles the market portfolio, assume that the beta of this fund is I. Suppose you want to create a portfolio with an expected return of 8% (by investing in government bonds and the index fund). What would be the standard deviation and the beta of such a portfolio? If you have $10,000 to invest and you want to create a portfolio consisting of government bonds and index funds that has half the systematic risk of the market portfolio, what would be the expected return and standard deviation of your portfolio? You can invest your money either in risk-free government bonds that yield 3% per year, or you can buy a well-diversified index fund that has an expected return of 10% and a standard deviation of 25%. Since the index fund resembles the market portfolio, assume that the beta of this fund is I. Suppose you want to create a portfolio with an expected return of 8% (by investing in government bonds and the index fund). What would be the standard deviation and the beta of such a portfolio? If you have $10,000 to invest and you want to create a portfolio consisting of government bonds and index funds that has half the systematic risk of the market portfolio, what would be the expected return and standard deviation of your portfolio?
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Portfolio Management Calculations 1 Portfolio with 8 expected return a Standard deviation Since the ... View the full answer
Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Posted Date:
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