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juin [17]
2 years ago
14

You manage an equity fund with an expected risk premium of 12.4% and a standard deviation of 38%. The rate on Treasury bills is

5.4%. Your client chooses to invest $120,000 of her portfolio in your equity fund and $80,000 in a T-bill money market fund. What is the expected return and standard deviation of return on your client’s portfolio? (Round your answers to 2 decimal places.)
Business
1 answer:
timama [110]2 years ago
4 0
  • The expected return = = 12.84 %.
  • The standard deviation = 22.8 %.

<u>Explanation</u>:

On the client's portfolio (total investment = 120 K + 80 K = 200 K,  

  • The expected return

                    = (12.4 %risk premium + 5.4 %risk free return) \times (120 K / 200 K) + 5.4 % \times (80 K / 200 K)

                    = 17.8 % \times 0.6 + 5.4 % \times 0.4

                    = 12.84 %.

  • The standard deviation would be = 38 % \times 0.6 + 0% \times 0.4

                                                                  = 22.8 %.

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Answer:

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Explanation:

Calculation to determine How much less than your brother will you have to deposit today

Using this formula

FV= Present value × (1 + interest rate)^number of years

Let plug in the formula

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PV= $28,000 ÷ 1.112^13

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Second step

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Therefore How much less than your brother will you have to deposit today will be $693.16

5 0
2 years ago
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Pachacha [2.7K]

Answer:

Explanation:

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frozen [14]

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