Question
Assume that the expected rate of return on the market portfolio is 20% and the rate of return on T-bills (the risk-free rate) is 6%.
Assume that the expected rate of return on the market portfolio is 20% and the rate of return on T-bills (the risk-free rate) is 6%. The standard deviation of the market return is 25%. Assume that the market portfolio is efficient.
(Key-in your answers in decimal format and keep 4 decimal places to your answers.)
What is the slope of the capital market line :
If an efficient asset has expected return of 27%, what is the standard deviation of this asset If you have $5,000 to invest, how much should you allocate it to market portfolio and the risk-free respectively in order to achieve the above return
Standard deviation:
Allocation to market ($):
Allocation to risk-free asset ($):
If you invest $16,000 in the risk-free asset and $24,000 in the market portfolio, how much money should you expect to have at the end of the year
Expected value ($):
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