Question
You invested in JL Fund (aside from risk-free securities). JL Fund has expected return of 14% with volatility of 20%. Risk Free rate of interest
You invested in JL Fund (aside from risk-free securities). JL Fund has expected return of 14% with volatility of 20%. Risk Free rate of interest is 3.9%. Should you add TK Corp to your portfolio if TK has expected return of 19%, a volatility of 59%, and correlation of 0 with JL Fund. a. Calculate the required return TK stock. Should you invest in TK? b. You decide to invest in TK , considering your risky investment , 61% in JL Fund and 39% in TK. Recalculate your required return on TK. c. You decide to reduce your exposure in TK . Now TK represents 14.661% of your risky portfolio. with the rest in JL fund. Recalculate your required return in TK stock. Is this the correct amount in TK stock to hold?
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