0
10000 to invest in a stock portfolio. stock A expected return 18 and stock B expected return 11. create a portfolio with expected return of 16.25. how much to invest in stock A and stock B?
Lalibini
6000.00
Victoria Costa
Add your answer:
Earn +20 pts
What is the difference between an efficient portfolio and the optimal portfolio?
The difference is that an efficient portfolio is one that offers the lowest risk for the greatest return or vice versa. An optimal portfolio is one that is preferred by investors because it is tailored specifically to the individual's risk preferences.
If a stocks expected return exceeds it required return this suggests that?
dividends are not being declared
What is the risk-free rate if the expected return is 20.4 and beta is 1.6 and expected market return is 15?
expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) where rf = risk free 20.4 - 24 = rf - 1.6rf -3.6 = -0.6rf rf = 6
What percentage of return annually can be expected from a high yield savings account?
A percentage of return that can be expected from a high yield savings account is 0.10%. Although this is the average, some percentages can get as high as 0.90%.
What is the standard deviation of a treasury bill that has a expected return of 10.5?
ddd
What is a dominant portfolio?
Dominant Portfolio is part of the efficient frontier in modern porfolio theory. If a portfolio has a higher expected return than another portfolio with the same level of risk, a lower level of expected risk than another portfolio with equal expected return or a higher expected return and lower expected risk than the the portfolio is dominant.
what is the expected portfolio return on a portfolio comprised of 25% h stock and 75% l stock?
As a well-informed investor, you naturally want to know the expected return of your portfolio—its anticipated performance and the overall profit or loss it's racking up. Expected return is just that: expected. It is not guaranteed, as it is based on historical returns and used to generate expectations, but it is not a prediction. The expected return of a portfolio will depend on the expected returns of the individual securities within the portfolio on a weighted-average basis. A well-diversified portfolio will therefore need to take into account the expected returns of several assets. KEY TAKEAWAYS To calculate a portfolio's expected return, an investor needs to calculate the expected return of each of its holdings, as well as the overall weight of each holding. The basic expected return formula involves multiplying each asset's weight in the portfolio by its expected return, then adding all those figures together. In other words, a portfolio's expected return is the weighted average of its individual components' returns. The expected return is usually based on historical data and is therefore not guaranteed. The standard deviation or riskiness of a portfolio is not as straightforward of a calculation as its expected return. How to Calculate Expected Return To calculate the expected return of a portfolio, the investor needs to know the expected return of each of the securities in their portfolio as well as the overall weight of each security in the portfolio. That means the investor needs to add up the weighted averages of each security's anticipated rates of return (RoR). An investor bases the estimates of the expected return of a security on the assumption that what has been proven true in the past will continue to be proven true in the future. The investor does not use a structural view of the market to calculate the expected return. Instead, they find the weight of each security in the portfolio by taking the value of each of the securities and dividing it by the total value of the security. Once the expected return of each security is known and the weight of each security has been calculated, an investor simply multiplies the expected return of each security by the weight of the same security and adds up the product of each security. Formula for Expected Return Let's say your portfolio contains three securities. The equation for its expected return is as follows: Ep = w1E1 + w2E2 + w3E3 where: wn refers to the portfolio weight of each asset and En its expected return.
Explain under what situation the risk of the portfolio can be reduced while maintaining the same level of expected return?
With the use of insurance on whatever part of the portfolio is invested in the stock market.
How can he return and standard deviation of a portfolio be determined?
How can the return and standard deviation of a portfolio be deteremined
Model test paper of ncfm investment analysis and portfolio management?
A portfolio comprises of two stock A and B. Stock A gives a return of 9% and Stock B gives a return of 6%. Stock A has a weight of 60% in the portfolio. What is the portfolio return?
When does Sharpe ratio attain its maximum?
The Sharpe Ratio for a portfolio of several investments is maximized when the investment weights are adjusted such that the expected return divided by the combined portfolio variance is maximized. See the related link for an Excel spreadsheet you explore this concept it.
Security A has an expected return of 7 percent?
Security A is less risky if held in a diversified portfolio because of its negative correlation with other stocks. In a single-asset portfolio, Security A would be more risky because sA> sBand CVA > CVB.
The CAPM implies that investors require a higher return to hold highly volatile securities?
The CAPM relates the expected return on a security to that of the overall market portfolio. A highly volatile security will have a high covariance with the market portfolio. Since beta equals the covariance of the security with the market portfolio divided by the variance of the market portfolio, the result is a high value of beta. When this high value of beta is plugged into the CAPM formula, all else not changed, the required return on the security (ra) is going to increase, implying investors require a higher return to hold a highly volatile security. t
What is the principle dominance?
A portfolio manager who examines the expected rate of return & risk statistics for many bonds & stocks may select assets worthy of investment by using a dominance principle
How do you make personal investment?
First, consider your risk tolerance, time period nad expected return; Second, do your asset allocation with a sufficient diversification; Third, manage your portfolio and rebalance the asset allocation.
What managerial actions can influence the value of the firm in the context of the shareholders wealth maximization model?
The risk and return trade-off or the attitude of management towards risk will play a major role in determining the value of a firm. This for example will form a basis of whether to invest in government bonds where the risk of default is low and return equally expected will be low, this is the opposite of a decision to invest in shares where the risk is high but the expected return can equally be high. In terms of SWM, the value of the firm will be reflected in the market value of a company's shares.
What does beta measures?
In the world of finance: BETA is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.
