QUESTION 5 An investor invests 70% of her wealth in a risky asset with an expected rate of return of 12% and a return standard deviation of 18%, and she puts 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are approximately respectively. and O 9.9%; 12.6% O 5.68%; 12.68% O 8.15%; 10.06% O 12%; 15.7%
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- Question 4 Suppose the risk-free rate is 5%. The expected return and standard deviation of a risky asset are 10% and 20%, respectively. If an investor invest 25% of her money in the risky asset, which is the investor's risk aversion coefficient? 1 3 5 4q4- The expected return on the market is 11% and the standard deviation of returns on the market is 4.8%. The risk-free rate of return is 5%. If you invest 75% of your funds in the market portfolio, and the balance in the risk-free asset, what is the expected return from your investment? a. 5.95% b. 10.21% c. 6.50% d. 9.50%6 - An investor invests 45% of his wealth in a risky asset with an expected rate of return of 0.20 and a variance of 0.12 and 65% in a T-bill that pays 4%. His portfolio's expected return and standard deviation are and , respectively. 130 a) O 0.197; 0.144 b) O 0.098; 0.111 c) O 0.086; 0.136 d) O 0.112; 0.054
- INV 1 6b You have decided to invest in three mutual funds: one in equities, one in long corporate and government bonds, and a money market fund invested in T-bills yielding 5%. Your estimate of the relevant parameters for the equities and bond funds are as follows: Expected Return Standard Deviation Equities .15 .30 Bonds .06 .09 The correlation between the fund returns is 0.12. Determine the weights of the optimal risky portfolio of the two risky funds, and its expected return and standard deviation.Question #2: Asset Allocation Suppose an investor has a choice between two assets: Janus Balanced Mutual Fund (a risky asset) and 30- day treasury bills (a risk-free asset). Investment Expected Return Standard Deviation (6) Portfolio Weight [E(r)] Janus Balanced Fund 8.58% 8.67% 30 day T-bill 0.26% 1-y (a) Calculate the expected return and standard deviation of the overall portfolio---a portfolio consisting of a mixture of the risky asset and risk-free asset. [Hint: Your answers will be expressed as a function of y] (b) Use your answer from Part (a) to draw the capital allocation line (CAL). Be sure to label your axes. Indicate the portfolio that consists only of the risk-free asset on your CAL as Point "A". Indicate the portfolio that consists only of the risky asset on your CAL as Point "B". (c) Calculate the slope of the Capital Allocation Line. (d) Suppose that the investor chooses a portfolio weight of y = 1.5. Find the expected return and standard deviation of the overall…Question 5 You have a portfolio with the following Social Risk Scores for each of your investments. Given the weights in each investment, what is the Social Risk Score for your portfolio? If the weights don't sum to one then the remainder is in cash with no Social risk. (Answer to one decimal place, 6.1) Weight (in %) Soc Risk Score Question 6 Weight (in %) Tesla Gov Risk Score 14 2 Tesla 8 Ford 4 5 11 Ford 7 Chevron 12 5 20 Chevron You have a portfolio with the following Governance Risk Scores for each of your investments. Given the weights in each investment, what is the Governance Risk Score for your portfolio? If the weights don't sum to one then the remainder is in cash with no environmental risk. (Answer to one decimal place, 6.1) 6 Home Depot 17 14 Home Depot 12 JP Morgan 4 13 2 JP Morgan 14 Starbucks Microsoft 4 7 7 11 11 4 Starbucks Microsoft 9 5 5
- Question 4 An investor considers adding the Cobalt High Income Fund to her portfolio. Cobalt has returned 18% over the previous year while the risk-free rate is 3%. Measures of risk for Cobalt include a beta of 1.5 and a standard deviation of 25%. The return on the relevant benchmark over the previous year is 13% with a standard deviation of 17%. The investor's estimate of the Jensen's alpha for the Cobalt Fund is closest to: Select one A. -0.01. B. 0.00. C. 0.01. D. 0.05. Question C iq5- The expected return on the market is 11% and the standard deviation of returns on the market is 4.8%. The risk-free rate of return is 5%. If you invest 75% of your funds in the market portfolio, and the balance in the risk-free asset, what is the standard deviation of the expected return from your investment? a. 3.60% b. 3.05% c. 1.20% d. 1.91%QUESTION 3 Leon has in his investment a portfolio that paid him the rate of returns of 14 %, -13%, 15.6%, 17% and 19.5% over the past five years. Required: a) Calculate the arithmetic average return (AAR) and geometric average return (GAR) of the portfolio? If someone asks you what is the actual compounding rate of return of Leon's portfolio over the past five year, which one (AAR or GAR) will be a better answer? b) Following is forecast for economic situation and Leon's portfolio returns next year, calculate the expected return, variance and standard deviation of the portfolio. . State of economy Probability Rate of returns Mild Recession 0.25 -2.5% Normal 0.45 13.5% Growth 0.30 20% c) Assume that expected return of the stock A in Leon's portfolio is 13.2%. Beta of this stock is 1.2, risk free rate is 3.5%. Calculate market portfolio rate of return, which is used to compute the expected return of this stock by Capital Asset Pricing Model (CAPM)?
- You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.09? Group of answer choices a. 85% and 15% b. 75% and 25% c. 67% and 33% d. 57% and 43%A4 a. Suppose we have two risky assets, Stock I and Stock J, and a risk-free asset. Stock I has an expected return of 25% and a beta of 1.5. Stock J has an expected return of 20% and a beta of 0.8. The risk-free asset’s return is 5%. a. Calculate the expected returns and betas on portfolios with x% invested in Stock I and the rest invested in the risk-free asset, where x% = 0%, 50%, 100%, and 150%.Sally has investments with the following characteristics in her portfolio: Investment in Beta Amount invested Stock Q 1.5 $80,000 Stock R 2.0 $50,000 Stock S 0.85 $70,000 Given the risk free rate of 2% and the market return of 7%, what is the expected rate of return of Sally’s investment portfolio?