Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 6 (15 points) You have invested 30% of your equity in market index fund (XM) and the remaining in risk free asset (XRF). Expected
Question 6 (15 points) You have invested 30% of your equity in market index fund (XM) and the remaining in risk free asset (XRF). Expected return from market index fund is 30% and from risk free asset is 10%. And your staff has estimated Total Risk of Pakistani Stock Market (VAR M) is 64 Required: 1. Estimated Rp from this portfolio 2. Total risk of this portfolio 3. Bea of this portfolio 4. Non-diversifiable risk of this portfolio 5. Diversifiable risk of this portfolio 6. Is it a well-diversified portfolio, explain in one line 7. Is it an efficient portfolio, explain in one line 8. Does it fall on the CML, or above it, or below it on the graph paper, explain in one line 9. Does it fall on the SML, or above it, or below it on the graph paper, explain in one line 10. Please calculate co-efficient of determination of this portfolio, as well as correlation of the return of this portfolio with the market portfolio. Question 6 (15 points) You have invested 30% of your equity in market index fund (XM) and the remaining in risk free asset (XRF). Expected return from market index fund is 30% and from risk free asset is 10%. And your staff has estimated Total Risk of Pakistani Stock Market (VAR M) is 64 Required: 1. Estimated Rp from this portfolio 2. Total risk of this portfolio 3. Bea of this portfolio 4. Non-diversifiable risk of this portfolio 5. Diversifiable risk of this portfolio 6. Is it a well-diversified portfolio, explain in one line 7. Is it an efficient portfolio, explain in one line 8. Does it fall on the CML, or above it, or below it on the graph paper, explain in one line 9. Does it fall on the SML, or above it, or below it on the graph paper, explain in one line 10. Please calculate co-efficient of determination of this portfolio, as well as correlation of the return of this portfolio with the market portfolio
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