Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Soalan 2 / Question 2 (20 markah / marks ) A) Assume the expected return on portfolio M is 13%, with a standard deviation of

Soalan 2 / Question 2 (20 markah / marks)

A) Assume the expected return on portfolio M is 13%, with a standard deviation of 20%, and the risk free rate is 5%. Calculate the risk premium for Portfolio M. (5 markah / marks)

B) Assume that the beta for IBM is 1.15, the risk free is 5% and the expected return on the market is 12%. Calculate the required return for IBM.

C) Markowitzs approach to portfolio selection is that an investor should evaluate portfolios on the basis of their risk and expected return. Explain the concept of an efficient frontier derived by Markowitz.

D)

Assume that the two assets have the following statistics:

Asset 1

Asset 2

Pulangan /Return (%)

10.1

15.4

Sisihan Piawaian / Standard Deviation (%)

16.8

27.5

Agihan / Weight

0.50

0.50

Pekali korelasi /Correlation coefficient

0.29

Calculate the standard deviation under each of these scenarios:

If r1,2 = + 1.0

If r1,2 = + 0.5

If r1,2 = + 0.29

/ If r1,2 = 0.00

PLEASE ANSWER THIS AS SOON AS POSSIBLE . THANK YOU

Jika / If r1,2 = - 0.5

Jika / If r1,2 = - 1.0

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

Fundamentals Of Financial Management

Authors: James C. Van Horne

10th Edition

0138596875, 978-0138596873

More Books

Students also viewed these Finance questions

Question

LOQ 5-13: What outcomes are associated with each parenting style?

Answered: 1 week ago

Question

2. Are my sources up to date?

Answered: 1 week ago