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
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%

You might be interested in
Sunset Foods relies on a highly centralized functional structure to ensure consistency in the quality and taste of its products
Rzqust [24]

Answer:

a. By establishing cross-functional teams.

Explanation:

Cross functional teams are the ones in which there are people from different departments. In this people from different departments works on the same common goal as set by the management to be achieved by the organization.

As the company has been working in the centralized functional structure, that means all the major decisions were taken by the executive management personnel, and accordingly the company can even in the establishment of cross functional team, can make this possible.

As all together each department will be working on this, and at the same time the management can keep access to the controls.

3 0
3 years ago
Measures that help to solve economic problems are called ​
Romashka-Z-Leto [24]

Economic stimulus Answer:

Explanation:

8 0
2 years ago
4. You have determined that Company X estimates bad debt expense with an aging of accounts receivable schedule. Company X's esti
MariettaO [177]

Answer:

a. $180

Explanation:

Bad debt expenses is generally classified as Administrative expense and hence it is included in the expense section of the income statement before the calculation of the Net Income.

From the question it is evident that the write offs during the period were $180 and hence the expense recorded in the Income statement as bad debt expense would be $180 because they are unrecoverable for the current period.

Hope this helps.

Thanks buddy.

4 0
3 years ago
Read 2 more answers
Laura is a gourmet chef who runs a small catering business in a competitive industry. laura specializes in making wedding cakes.
quester [9]
<span>Laura should both reduce her variable costs and increase her total revenue. If she charged 10% more ($275 instead of $250) and reduced her variable costs by 10% ($162 instead of $180), she would nearly double her profits. She would profit $93 per cake compared to her current $50.</span>
8 0
2 years ago
Natalie operates on a pretty tight budget. She is a price-conscious shopper and usually buys store or generic brands to save mon
Llana [10]

Answer: The income effect

Explanation: The income effect refers to the effect on the purchasing power of the consumer when his or her income level changes.

In the given case, Natalie was price conscious  and used to buy lower priced goods with the objective of saving money. When her income rises she starts buying expensive goods as her purchasing power increases with increase in income.

Hence from the above we can conclude that the correct option is A.

7 0
3 years ago
Other questions:
  • Which account is used with a periodic inventory system?
    9·1 answer
  • On October 31, 2021, Damon Company’s general ledger shows a checking account balance of $8,415. The company’s cash receipts for
    10·1 answer
  • What document is a roadmap to help the facility executives reach the facility's goals?
    14·1 answer
  • The CBA is one of the first steps in seeking initial approval from senior management for an HRIS Project.
    12·1 answer
  • Refer to exhibit 4-5. if a free market were allowed in the transplanted kidney market, then the equilibrium price would be p2. t
    14·1 answer
  • Theresa sued her former employer for age, race, and gender discrimination. She claimed $200,000 in damages for loss of income, $
    5·1 answer
  • Significant accounting policies may not be:
    11·1 answer
  • Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,600
    11·1 answer
  • A necessary condition to use the equity method of reporting for an equity investment is that the investor company must
    9·1 answer
  • When the selling prices of all products at the split-off point are unavailable, the ________ is the best alternative for allocat
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!