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snow_lady [41]
3 years ago
14

An investor wishes to construct a portfolio consisting of a 70% allocation to a stock index and a 30% allocation to a risk free

asset. The return on the risk-free asset is 4.5% and the expected return on the stock index is 12%. The standard deviation of returns on the stock index 6%. Calculate the expected return on the portfolio and the expected standard deviation of the portfolio.
Business
1 answer:
Rzqust [24]3 years ago
7 0

Answer:

9.75%

4.2%

Explanation:

Given:

Stock index portfolio = 70% = 70/100 = 0.70

Risk free asset = 30% = 30/100 = 0.30

Return on the risk-free asset = 4.5% = 4.5/100 = 0.045

Return on the stock index = 12% = 12/100 = 0.12

Standard deviation (Return on the stock index) = 6% = 6/100 = 0.06

Computation of expected return on the portfolio:

Expected return = [Risk free asset × Return on the risk-free asset ] + [Stock index portfolio × Return on the stock index ]

= [0.3 × 4.5] + [0.7 × 12]

= [1.35 + 8.4]

= 9.75%

Computation of expected standard deviation of the portfolio:

Expected standard deviation = [Stock index portfolio × Standard deviation (Return on the stock index)]

= 0.7× 6

= 4.2%

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Answer:

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Explanation:

Total finance charge = $398

Laptop cost = 350 + x

Desktop = X

<u>Workings</u>

Finance cost = (7% *X ) + (6% * 350+x ) = 398

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0.13 X + 21 = 398

0.13 X = 398 -21

0.13 X = 377

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Cost of Desktop = 2900

Cost of Laptop =2900+350 =3,250

6 0
3 years ago
Under the Uniformed Services Employment and Reemployment Rights Act of 1994, employers must reemploy workers who left jobs to fu
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Answer:

The correct answer is: <u>5 years</u>.

Explanation:

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7 0
3 years ago
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Answer:

$0

Explanation:

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As we know in the case of goodwill, the impairment test is to be done on periodic basis and if there is any fall in the value so the same is to be reported as the impairment loss

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4 0
2 years ago
Round 784.967 to the nearest whole number
ella [17]
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3 years ago
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Edgar Co. acquired 60% of Stendall Co. on January 1, 2013. During 2013, Edgar made several sales of inventory to Stendall. The c
rjkz [21]

Answer:

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The computation of net income is shown below:-

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