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Romashka-Z-Leto [24]
3 years ago
9

You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 30%. The T-bill rate is 6%. Your

client chooses to invest 65% of a portfolio in your fund and 35% in an essentially risk-free money market fund. What is the expected return and standard deviation of the rate of return on his portfolio?
Business
1 answer:
Roman55 [17]3 years ago
7 0

Answer:

Explanation:

Expected return of the portfolio is weighted average of the return of the components.

E(R) = w1 * R1 + w2 * R2

E(R) = 65% * 18% + 35% * 6%

E(R) = 11.70% + 2.10%

Expected Return, E(R) = 13.80%

Standard deviation of portfolio is mathematically represented as:

\sigma =\sqrt{w_1^2\sigma _1^2+w_2^2\sigma _2^2+2w_1w_2p_{1,2}\sigma_1\sigma_2}

where

w1 = the proportion of the portfolio invested in Asset 1

w2 = the proportion of the portfolio invested in Asset 2

σ1 = Asset 1 standard deviation of return

σ2 = Asset 2 standard deviation of return

For risk free money market fund, standard deviation = 0 and its correlation with risky portfolio = 0

\sigma  =\sqrt{ (0.65 * 0.30)^2 + (0.35 * 0)^2 + (2 * 0.65 * 0.30*0.35 *0*0)} \\\\= \sqrt{0.038025 +0+0} \\\\ = 0.195

Standard deviation = 19.50%

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Answer:

 $16.66

Explanation:

Data provided

Direct material = $55,870

Direct labor hour = 475

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Machine hour = $556

Number of units = 4,100

Overhead rate = $13

The preparation of job sheet is shown below:-

Direct Material                $55,870

Add: Direct Labor           $5,225

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Overhead                         $7,228

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Total                                  $68,323                      

Number of units                4,100

Cost per unit                      $16.66

($68,323 ÷ 4,100)

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3 years ago
Define organization and explain three of the characteristics of organization. Give three examples of organizations, try to inclu
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Answer:

Organization is arranging or coordinating especially in a business, society, or association aspect. Examples of organization could be:

1. Arranging a group of people who work in specific studies

2. Taking books by their genre, and putting them together

3. The economic pyramid, is the perfect example of an organization. Defining society by class.

5 0
1 year ago
Why is the International System of Units (SI) used by scientists all over the world?
borishaifa [10]

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It allows scientists from disparate regions to use a single standard in communicating scientific data without vocabulary confusion.

Explanation:

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2 years ago
Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $300,000 for extrac
Step2247 [10]

Answer:

Santa Fe's cost depletion expense for the current year is $90,000

correct option is b) $90,000

Explanation:

given data

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Santa Fe extracted = 1,500 pounds

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to find out

Santa Fe's cost depletion expense for the current year

solution

we get Santa Fe's cost depletion expense for the current year will be here as

cost depletion expense  = \frac{paid}{recover}  ×  extracted     .......1

put here value we get

cost depletion expense  = \frac{300000}{5000r}  ×  1,500

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8 0
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The job offers can be found through Networking, Referrals, company websites, job fairs and social media.

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