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baherus [9]
3 years ago
5

Jackie has one risk-free asset and one risky stock in her portfolio. The risk-free has an expected return of 3.2 percent. The ri

sky asset has a beta of 1.3 and an expected return of 14.9 percent. What is the expected return on the portfolio if the portfolio beta is 0.975?
Business
1 answer:
masha68 [24]3 years ago
8 0

Answer:

Portfolio Return = 11.975%

Explanation:

The portfolio return is calculated by taking the weights of individual securities in a portfolio and multiplying them by the return of individual securities. The formula can be written as,

Portfolio return = wA * rA + wB * rB

Where,

  • wA is the weight of security A
  • rA is the return on security A
  • wB is the weight of security B
  • rB is the return on security B

The risk free asset has a beta of zero.

Let the weight of risk free asset be x. The weight of risky asset is 1-x.

Portfolio beta =       0.975 =  x * 0 + (1-x) * 1.3

0.975 = 1.3 - 1.3x

0.975 - 1.3 = -1.3x

-0.325 / -1.3 = x

x = 0.25

Portfolio return = 0.25 * 0.032 + (1-0.25) * 0.149 = 0.11975 or 11.975%

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1 year ago
Colin told the management team that their Ohio-based company should produce the textiles for the new line of jackets in China be
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Free trade.

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This theoretical policy can be explained to be certain laws under which the government is seen to impose absolutely no tariffs, taxes, or duties on imports, or quotas on exports. Therefore, it is directly seen to be the opposite of protectionism, a defensive trade policy intended to eliminate the possibility of foreign competition. It is seen in terms of unrestricted measures in importation and also exportation of goods in and out of a country.

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7 0
3 years ago
In early July, Damon Rutton purchased a $70 ticket to the December 15 game of the Sarasota Shippers. Parking for the game was ex
Bingel [31]

Answer:

Sunk cost will be = $70

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Sunk Cost refers to the cost for which the amount has been already spent, and cannot be recovered. These are generally incurred and then not regarded for decision making as irrespective of decision being viable or not this cost cannot be avoided.

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