FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. The o of your

image text in transcribed

3. Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. The o of your portfolio was 0.25 and om was 0.21. The risk premium of index return is 8% and the risk-free interest rate is 2%. (1) What is the beta of this portfolio? (10 marks) (2) What is the expected return of your portfolio if it is fairly priced

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mortgage Ripoffs And Money Savers

Mortgage Ripoffs And Money Savers

Authors: Carolyn Warren

1st Edition

0470097833, 978-0470097830

More Books

Students also viewed these Finance questions

Question

★★★★★
Public companies that operate in different businesses or segments are required to report operating results for those segments. This requirement makes it possible to evaluate the performance of...

Answered: 1 week ago

Question

★★★★★
Carotenoids are yellow, orange, and red pigments synthesized by plants. The observed color of an object is not the color of light it absorbs but rather the complementary color, as described by a...

Answered: 1 week ago

Question

★★★★★
Explain what is meant by tiers of software development.

Answered: 1 week ago

Question

★★★★★
Pruitt Corporation issued 3,000, 8%, 5-year, $1,000 bonds dated January 1, 2010, at 100. (a) Prepare the journal entry to record the sale of these bonds on January 1, 2010. (b) Prepare the journal...

Answered: 1 week ago

Question

★★★★★
3. Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds. The o of your portfolio was 0.25 and om was 0.21. The risk premium of...

Answered: 1 week ago

Question

★★★★★
Quidi Vidi Co. has 325 motors in its inventory at the start of the week. It will use all of these in its weekly production runs and then resupply its inventory for the next week. The carrying cost...

Answered: 1 week ago

Question

★★★★★
Mr. Jones is contemplating retirement. He has just celebrated his 55th birthday and his net worth is $2 million. He hopes that after retirement he can maintain a lifestyle that costs him $100,000 per...

Answered: 1 week ago

Question

★★★★★
5. A manager of a Merchandising firm wishes to test whether its three salesmen X, Y and Z tend to make sales of the same size or whether they differ in their selling abilities. During a week there...

Answered: 1 week ago

Question

★★★★★
What is one way a professional running a lineup can make the procedure suggestible to an eyewitness? A) encouraging the witness when they identify the suspect B) remaining silent when witnesses make...

Answered: 1 week ago

Question

★★★★★
Suppose that 3000 drivers in Wakanda were randomly breath-tested on 21 April 2019 and 116 were above the limit of 0.05 blood-alcohol level. On 15 May 2019, 4000 drivers were tested and 98 were above...

Answered: 1 week ago

Question

★★★★★
Which of the following is an appropriate guideline for waste disposal? O a. Clean trash cans regularly to remove drips and crumbs that provide food for pests Ob. Do not use plastic liners in trash...

Answered: 1 week ago

Question

★★★★★
1 What management systems are operating in African countries (and other post-colonial regions), in different ways in different industries and companies, and how successful are these systems in...

Answered: 1 week ago

Question

★★★★★
investigating the cultural contributions that non-Western (particularly postcolonial and post-Soviet) approaches can make to global managing;

Answered: 1 week ago

Question

★★★★★
developing conceptual and empirical links between theoretical formulations of cultural value dimensions and specific manifestations in HRM/people management policies and practices;

Answered: 1 week ago

Previous Question Next Question