Question
Can you please show me (step by step) how to solve? 9. You bought one of Great White Shark Repellant Co.s 5.8 percent coupon bonds
Can you please show me (step by step) how to solve?
9. You bought one of Great White Shark Repellant Co.s 5.8 percent coupon bonds one year ago for $1,030. These bonds make annual payments and mature 14 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 5.1 percent. If the inflation rate was 3.9 percent over the past year, what was your total real return on investment?
10. A stock has a beta of 1.12 and an expected return of 10.8 percent. A risk-free asset currently earns 2.7 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of .92, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? d. If a portfolio of the two assets has a beta of 2.24, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.
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