Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

RA = 3.5% + 0.65RM + eA RB = 1.6% + 0.80RM + eB M = 21%; R-squareA = 0.22; R-squareB = 0.14 Assume you

RA = 3.5% + 0.65RM + eA

RB = 1.6% + 0.80RM + eB

M = 21%; R-squareA = 0.22; R-squareB = 0.14

Assume you create a portfolio Q, with investment proportions of 0.50 in a risky portfolio P, 0.30 in the market index, and 0.20 in T-bill. Portfolio P is composed of 60% Stock A and 40% Stock B.

a. What is the standard deviation of portfolio Q? (Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What is the beta of portfolio Q? (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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Managerial Finance Brief

Authors: Chad J. Zutter, Scott B. Smart

8th Global Edition

1292267143, 978-1292267142

More Books

Students also viewed these Finance questions

Question

Fixed dollar match: 75 cents per each $1 employee contribution.

Answered: 1 week ago