(Ventures and Fund. Examination)

3) Now guess that the financial backer needs just to purchase A (whose normal return and fluctuation is given in Q1) yet in addition needs to contribute 40% of his/her cash in a danger free T-Bill whose return is 12%. The relationship coefficient between a T-Bill and stock An is +0.2. Given this discover the portfolio anticipated return and portfolio change.

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1) There are two stocks which a financial backer needs to purchase. The stock has a normal return of 25% and a normal fluctuation of 16% while stock B has a normal return of 15% and expected change of 9%. Discover the portfolio return and portfolio change accepting that the connection coefficient among An and B is + 0.4 and expecting that financial backer contributes 60% of his/her cash in stock A.

1) Is the Morkowitz Theory the best Approach for all Portfolios?

Clarify Markowitz's line of reasoning regarding why financial backers should look for a proficient portfolio.

2) How Low Can Standard Deviation Go?

Is it genuine that the target of proficient portfolio enhancement is to decide a standard deviation that is lower than the individual security's standard deviation?

3) Is there a True Risk-Free Portfolio?

As you would see it, will be it conceivable to build a danger free portfolio?

Current portfolio hypothesis

b.Assume ACES offers' beta is 1.45, the year hazard free pace of return is 5.3%p.a and the market hazard premium is 4% p.a. Diagram a system for a sane financial backer if BHP's offers are as of now valued to accomplish a 10% p.a. anticipated pace of return.

c.If a value store supervisor accepts the Indonesian financial exchange will start to go downwards over the course of the following year, how should the chief 'adjust' his/her value portfolio to help protect financial backers' abundance under his/her administration? Expect that the asset just puts resources into values.

d.Diversification can't take out all portfolio hazard. Do you concur with the assertion? Clarify your reasons

Imagine that a particular investor would like to invest in the two assets presented in the table below but since she is a rational investor, she wishes to run some analysis to see if the portfolio return and risk are matching with her investment standards and expectations. The financial information about the portfolio is as follows: Expected Standard Investment Rate of Deviation Weight (w) Return (). Asset C 11.00% 5.00 75.00% Asset D -5.00% 8.00 25.00% Total 100% Assume that the correlation coefficient (p) of these two securities +0.50. For a portfolio consisting of 75.00% of the funds invested in asset C and the reminder in asset D, determine and risk (op) and the portfolio return (r^) 5.06% portfolio risk (rounded) and 7.00% portfolio return 5.90% portfolio risk (rounded) and 6.12% portfolio returnReturn Q. Asset C 11.00% 5.00 75.00% Asset D -5.00% 8.00 25.00% Total 100% Assume that the correlation coefficient (p) of these two securities +0.50. For a portfolio consisting of 75.00% of the funds invested in asset C and the reminder in asset D, determine and risk (op) and the portfolio return (r^p) 5.06% portfolio risk (rounded) and 7.00% portfolio return 5.90% portfolio risk (rounded) and 6.12% portfolio return 5.06% portfolio risk (rounded) and 7.50% portfolio return 4.65% portfolio risk (rounded) and 5.15% portfolio returnNelson Ltd. is considering investing in one of two portfolios of financial investments. The company's objective is to reduce risk through diversification and it believes that the return on any individual investment is not correlated with the return on any other investment. The return on market portfolio is estimated to be 15% and the risk-free rate is 5%. The amount invested, the expected return, and betas for each portfolio are given as follows: Portfolio 1: Amount Equity Investment invested Expected return Total risk beta Company X $60 million 24% 11% 1.3 Company Y $40 million 26% 9% 1.4 Portfolio 2: Amount Equity Investment invested Expected return Total risk beta Company W $50 million 25% 12% 1.2 Company Z $50 million 26% 13% 1.4 Required: a. Calculate the expected return of each portfolio. (6 marks) b. Estimate the required rate of return on the two portfolios using the Capital Asset Pricing Model (CAPM). (7 marks) c. Critically discuss the advantages and disadvantages of utilising Portfolio Theory to assist with portfolio selection. (12 marks)2. Your $10,000 portfolio invests $9,000 in stock X and $1,000 in stock Y. Calculate the portfolio return in each type of market condition. Then use these portfolio returns and the scenario analysis method to calculate the expected return and standard deviation of the portfolio. Weight 90% putwir this is for every scenerio 10% Economy Probability Stock X Stock Y Portfolio Deviation Square of State Rehan Rate Return Rate Return Rate (r) from E(r) Deviation p"Square of Deviation Bear Market -20% -15% Normal Market 0.5 18% 20% Bull Market 509% 10% Portfolio Expected Variance= Return E(r) = Sid.=