Question
Answer the following questions using the data in the table below: Risk free Rate 3% Company Expected Return Risk Giants 14% 20% Colts 11% 15%
Answer the following questions using the data in the table below:
Risk free Rate 3%
Company | Expected Return | Risk |
Giants | 14% | 20% |
Colts | 11% | 15% |
Dolphins | 8% | 9% |
a. Which portfolio above would be considered the market portfolio? Show why
b. What combination on the capital market line will produce a return of 6%? Comment on this portfolio (weighting); with regards to what it represents and how you would achieve it (construction)
c. What combination will produce a return of 15%? Comment on this portfolio (weighting); with regards to what it represents and how you would achieve it (construction)
d. What is the risk (as measured by standard deviation) of the portfolio you calculated in b and c?
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