Your portfolio investment consists of $15,000 invested in only one stock Microsoft Suppose the risk free rate is 5 Microsoft stock has an expected return of 12 and a volatility of 40 , and the market portfolio has an expected return of 10 , and a volatility of 18 Under CAPM assumptions (a) What alt...

a R e R f beta R m R f 12 5 Beta10 5 Solving we get Beta 14 ...

Your portfolio investment consists of $15,000 invested in only one stock Microsoft. Suppose the risk-free rate

Question:

Your investment consists of $15,000 invested in only one stock – Microsoft. Suppose the risk-free rate is 5%. Microsoft stock has an of 12% and a volatility of 40%, and the market has an of 10%, and a volatility of 18%. Under CAPM assumptions:

(a) What alternative investment has the lowest possible volatility while having the same as Microsoft?
(b)What investment has the highest possible while having the same volatility of Microsoft?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...