Expected return on portfolio 2 Line (capital market line) II Y Line 35% in risk-free asset -40% in risk-free asset 65% in stocks represented by Q 140% in stocks represented by Q Risk-free rate (Rp) 70% in risk-free asset 30% in stocks represented by Standard deviation of portfolio's return Portfolio Q is composed of 30 percent AT&T, 45 percent GM, and 25 percent IBM.

Consider the following simplified APT model: Factor Expected Risk Premium Market 6.4% Interest Rate -0.6% Yield Spread 5.1%   Factor Risk Exposures   Market Interest Rate Yield Spread Stock Stock(b1) (b2) (b3) P 1.0 -2.0 -0.2 P2 1.2 0 0.3 P3 0.3 0.5 1.0   Required: 1. Calculate the expected return for the above stocks. Assume risk free rate is 5%. Consider a portfolio with equal investments in stocks P, P2 and P3   2.What are the factor risk exposures for the portfolio?    3.What is the portfolio’s expected return?

Two investments, X and Y, have the characteristics shown below. E(X) = $70, E(Y)3D$120, o =7,000, a = 14,000, and ory =7,500 If the weight of portfolio assets assigned to investment X is 0.3, compute the a. portfolio expected return and b. portfolio risk. a. If the weight of portfolio assets assigned to investment X is 0.3, the portfolio expected retum is $ (Type an integer or a decimal.) b. If the weight of portfolio assets assigned to investment X is 0.3, the portfolio risk is approximately $. (Round to two decimal places as needed.)

2. Assuming the following: Average Return (Risky Portfolio) 3.86% Standard Dev (Risky Portfolio) 10.56% Average Risk Free Rate 2.18% Return on Risk Free Asset Avg 4.15% Using the formula: E(rc)=rf + y* (E(rp) - rf) Solve for:  1. % of Risky Assets (y): 2. % of Risk Free Assets (1-y): Note: You wish to generate a 7% return for your complete portfolio E(rc)

Consider the following simplified APT model: Factor                                                  Expected Risk Premium Market                                                6.4% Interest Rate                                       -0.6% Yield Spread                                        5.1%                                                        Factor Risk Exposures                                     Market               Interest Rate             Yield Spread Stock                          Stock (b1)                  (b2)                             (b3) P                                    1.0                           -2.0                             -0.2 P2                                  1.2                            0                                 0.3 P3                                  0.3                            0.5                              1.0 a) Calculate the expected return for the above stocks. Assume risk free rate is 5%. Consider a portfolio with equal…

14. There are three securities in the market whose return on market portfolio yield the following results : reg rfood rmrf Source SS df MS Number of obs 516 F (1, 514) 763.49 %3D Model 6355.67324 6355.67324 Prob > F 0.0000 Residual 4278.81044 514 8.32453393 R-squared 0.5976 %3D Adj R-squared 0.5969 Total 10634.4837 515 20.6494829 Root MSE 2.8852 rfood Coef. Std. Err. P>|t| [95% Conf. Interval] rmrf .7834176 .0283526 27.63 0.000 .7277164 .8391188 _cons .3391769 .1275602 2.66 0.008 .0885734 .5897804 i. reg rdur rmrf Source SS df MS Number of obs 516 %3D F (1, 514) 1458.52 %3D Model 12789.402 1 12789.402 Prob > F 0.0000 %3D 4507.13047 R-squared Adj R-squared Residual 514 8.76873633 0.7394 %3D 0.7389 Total 17296.5324 515 33.5854999 Root MSE 2.9612 rdur Coef. Std. Err. P>|t]| [95% Conf. Interval] rmrf 1.111316 .0290992 38.19 0.000 1.054148 1.168484 _cons .063612 .1309193 0.49 0.627 -.1935907 .3208148 ii. reg rcon rmrf Source SS df MS Number of obs 516 F (1, 514) 2096.01 Model 13866.0296 1…

Calculate the weighted average expected return of the portfolio. Stock   Investment   Expected ReturnA         $20,000           15%B         $4,000              10%C         $26,000            12%

What is the expected return for the following portfolio? (State your answer in percent with two decimal places.) Stock Expected returns Investment AAA 35% $500,000   BBB 29% $1,300,000   CCC 18% $1,200,000   DDD 7% $1,500,000   O.17.13%   O.19.40%   O.21.01%   O.22.21%   O.23.88%

What is the standard deviation of a portfolio formed of shares A and B? Asset (A) E(R₂) = 9% SDA = 4% W₁ = 0.4 Select one: A. 4.99% B. 4.56% C. 3.68% D. 5.16 Asset (B) E(R₂) = 11% SDB = 6% WB = 0.6 COVA, B = 0.0011

distributiothe following progability for stocks A and DE 20201 State Probability Return on Stock A Return on Stock B 1 0.10 10% 8% 0.20 13% 7% 0.20 12% 6% 0.30 14% 9% 5 0.20 15% 8% Ghi The expected rates of AKL return of stocks A and B are respectively. A 14%; 10% MALA B 13.2%; 9% C 7.7%; 13.2% MA D 13.2%; 7.7% 12345 2 3 4 and MALAKLA MALA MA