Question
ou manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 38%. The T-bill rate is 6%. Your
ou manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 38%. The T-bill rate is 6%. Your risky portfolio includes the following investments in the given proportions:
Stock A | 31 | % |
Stock B | 35 | % |
Stock C | 34 | % |
Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 15%.
a. What is the proportion y? (Round your answer to the nearest whole number.)
b. What are your clients investment proportions in your three stocks and the T-bill fund?(Do not round intermediate calculations. Round your answers to 2 decimal places.)
c. What is the standard deviation of the rate of return on your clients portfolio?(Do not round intermediate calculations. Round your answer to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started