1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Oxana [17]
3 years ago
13

You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your

risky portfolio includes the following investments in the given proportions: Stock A 25 % Stock B 32 % Stock C 43 % Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 16%. a. What is the proportion y?
Mathematics
1 answer:
Fofino [41]3 years ago
4 0

Answer:

y = 0.80

Step-by-step explanation:

Given:

- The expected rate of return for risky portfolio E(r_p) = 0.18

- The T-bill rate is r_f = 0.08

Find:

Investing proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 16%.

What is the proportion y?

Solution:

- The proportion y is a fraction of expected risky portfolio and the left-over for the T-bill compliance. Usually we see a major proportion is for risky portfolio as follows:

                                     E(r_c) = y*E(r_p) + (1 - y)*r_f

                                     y*E(r_p) + (1 - y)*r_f = 0.16

- Re-arrange for proportion y:

                                     y = ( 0.16 - r_f ) / (E(r_p) - r_f)

- Plug in values:

                                    y = ( 0.16 - 0.08 ) / (0.18 - 0.08)

                                    y = 0.80

- Hence, we see that 80% of the total investment budget becomes a part of risky portfolio returns.                                    

               

You might be interested in
Find the polynomial of minimum degree, with real coefficients, zeros at
drek231 [11]

Answer:

\huge\boxed{p(x)=4x^3-20x^2+4x+300}

Step-by-step explanation:

\text{If}\ x=4\pm3i\ \text{and}\ x=-3\ \text{are the zeros of a polynomial, then it has  a form:}\\\\p(x)=\bigg(x-(4-3i)\bigg)\bigg(x-(4+3i)\bigg)\bigg(x-(-3)\bigg)\bigg(r(x)\bigg)\\\\p(x)=(x-4+3i)(x-4-3i)(x+3)\bigg(r(x)\bigg)\\\\p(x)=\underbrace{\bigg((x-4)+3i\bigg)\bigg((x-4)-3i\bigg)}_{\text{use}\ (a+b)(a-b)=a^2-b^2}(x+3)\bigg(r(x)\bigg)\\\\p(x)=\bigg((x-4)^2-(3i)^2\bigg)(x+3)\bigg(r(x)\bigg)\qquad\text{use}\ (a-b)^2=a^2-2ab+b^2

p(x)=(x^2-2(x)(4)+4^2-3^2i^2)(x+3)\bigg(r(x)\bigg)\qquad\text{use}\ i^2=-1\\\\p(x)=(x^2-8x+16-9(-1))(x+3)\bigg(r(x)\bigg)\\\\p(x)=(x^2-8x+16+9)(x+3)\bigg(r(x)\bigg)\\\\p(x)=(x^2-8x+25)(x+3)\bigg(r(x)\bigg)\qquad\text{use FOIL}:\ (a+b)(c+d)=ac+ad+bc+bd\\\\p(x)=\bigg((x^2)(x)+(x^2)(3)+(-8x)(x)+(-8x)(3)+(25)(x)+(25)(3)\bigg)\bigg(r(x)\bigg)\\\\p(x)=(x^3+3x^2-8x^2-24x+25x+75)\bigg(r(x)\bigg)\qquad\text{combine like terms}\\\\p(x)=(x^3-5x^2+x+75)\bigg(r(x)\bigg)

\text{The y-intercept is at 300}.\\\\\text{For}\ w(x)=a_nx^n+a_{n-1}x^{n-1}+a_{n-2}x^{n-2}+...+a_1x+a_0\\\\\text{y-intercept is}\ a_0\\\\\text{Therefore for}\ p(x)=(x^3-5x^2+x+75)\bigg(r(x)\bigg)\\\\\text{y-intercet is}\ 75\bigg(r(x)\bigg)\\\\75\bigg(r(x)\bigg)=300\qquad\text{divide both sides by 75}\\\\r(x)=4\\\\\text{Finally:}\\\\p(x)=(x^3-5x^2+x+75)(4)\qquad\text{use the distributive property}\\\\p(x)=(x^3)(4)+(-5x^2)(4)+(x)(4)+(75)(4)\\\\p(x)=4x^3-20x^2+4x+300

7 0
3 years ago
Simplify negative 7 and 1 over 8 − negative 9 and 1 over 2.
bulgar [2K]

Answer:

answer is D : 2 3/8

Step-by-step explanation:

5 0
3 years ago
Find all solutions by factoring.<br> c? + 13c + 40 = 0
Karolina [17]

Answer: c = -5, -8

Step-by-step explanation:

c^2 +13c+40=0

(c+5)(c+8)=40

c = -5, -8

3 0
3 years ago
Which 2 triangles are similar ​
mixer [17]

Answer:

Triangle A and B

Step-by-step explanation:

The lengths from triangle A is being doubled to make the lengths of triangle B. They also have the same angles.

7 0
3 years ago
Find the nth term of 6,8,10,12
klemol [59]

Answer:

6 8 10 12 14 16 18 20 22

1 2. 3. 4. 5. 6. 7. 8. 9

4 0
2 years ago
Other questions:
  • Solve the absolute value equation |x| − 2 = 5 to find the distance Mary can walk forward, x, in 5 seconds.
    11·1 answer
  • A regular hexagon is shown.
    8·2 answers
  • Help! is it a or b?
    13·1 answer
  • Three consecutive even integers add to −6. What are these integers?
    10·1 answer
  • Select Is a Function or Is not a Function to correctly classify each relation.
    8·1 answer
  • Find the slope (-10,3) (5,10)
    12·1 answer
  • What is an equation of the line that passes through the points (2, 1) and (6,-5)
    6·1 answer
  • The area of a rectangular concrete patio is 70 square meters. It is 10 meters long. How wide is it?
    7·1 answer
  • Which expression is equivalent to sin
    12·1 answer
  • Let h(x)=-1/3x+2. Find -4h(9)
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!