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Your investment portfolio consists of $10,000 worth of Google stock. Suppose that the risk-free rate is 4%, Google stock has an expected return of
Your investment portfolio consists of $10,000 worth of Google stock. Suppose that the risk-free rate is 4%, Google stock has an expected return of 14% and a volatility of 35 %, and the market portfolio has an expected return of 12% and a volatility of 18%. Assume that the CAPM assumptions hold. 1) What alternative investment has the lowest possible volatility while having the same expected return as Google? (2.5 points) 2) The volatility of the alternative investment that has the lowest possible volatility while having the same expected return as Google is closest to: (2.5 points) 3) What alternative investment has the highest possible expected return while having the same volatility as Google? (2.5 points) 4) The expected return on the alternative investment having the highest possible expected return while having the same volatility as Google is closest to? (2.5 points)
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