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
g100num [7]
3 years ago
11

Assume that you manage a risky portfolio with an expected rate of return of 12% and a standard deviation of 39%. The T-bill rate

is 6%A client prefers to invest in your portfolio a proportion (y) that maximizes the expected return on the overall portfolio subject to the constraint that the overall portfolio's standard deviation will not exceed 30%. a. What is the investment proportion, y
Business
1 answer:
neonofarm [45]3 years ago
3 0

Answer:

y = 0.76923076923  or  76.923076923%  rounded off to 76.92%

So, 76.92% of the portfolio should be invested in risky portfolio.

Explanation:

The portfolio standard deviation for a portfolio consisting of two securities with one of them being the risk free security is calculated by multiplying the standard deviation of the risky security by the weightage of investment in the risky security as a proportion of the overall investment in portfolio. The formula can be written as follows,

Portfolio STDEV = Weight of Risky Asset  *  STDEV of risky asset

30% = y  *  39%

30% / 39% = y

y = 0.76923076923  or  76.923076923%  rounded off to 76.92%

You might be interested in
According to Douglas McGregor, the classical perspective on management is consistent with which of the following? a. Theory X ma
victus00 [196]

Answer: Theory X manager

Explanation:  The classical theory of management focuses on the efficiency and productivity from the employees. Unlike the modern theory, it does not take into consideration the human attributes and behavior of the employees.

The X managers assumes that his subordinates are little motivated and inefficient. These managers use authoritarian style and strictly monitors the performance of employees. The liberty of employees under such managers is very low.

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

5 0
3 years ago
How does the relationship between risk and expected return serve to allocate capital in a market?
Arte-miy333 [17]

The relationship between risk and expected return serves to allocate capital in a market. Investors want to maximize return for a given level of risk, so capital flows to its most efficient use.

There is a positive correlation between the level of risk taken and the level of return expected. The greater the risk, the greater the expected return and the greater the likelihood of suffering a large loss.

The relationship between risk and expected return is called the risk-return relationship. This is a positive relationship because the more risk you take, the higher the required return that most people demand. Risk aversion describes a positive risk-reward ratio.

Learn more about risk and expected return at

brainly.com/question/25821437

#SPJ4

7 0
2 years ago
. A tomato farmer has used direct distribution to sell to local consumers through an area farmers' market. Last year, she sold 4
ch4aika [34]

Answer:

the farmer's total revenue when she uses the direct channel = 400 x $2.49 = $996

if she uses the indirect channel, her total revenue = 650 x $1.63 = $1,059.50

her total revenue will increase when selling to he supermarkets, but also her variable production costs will increase. This means that it is probable that her total contribution margin decreases even if total revenue decreases.

3 0
3 years ago
One of the six characteristics economists use to judge how well an item
Aleonysh [2.5K]

Answer:

Money can easily be divided into smaller denominations is the correct answer.

Explanation:

4 0
3 years ago
You plan to borrow $40,000 at a 6% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year pay
STALIN [3.7K]

Answer:

Interest for second year $2,114.08

Explanation:

given data

loan Amount = $40,000.00  

Interest rate r = 6.00%  

time period t = 7  

solution

we get here first Equal Monthly Payment EMI that is express as

EMI = \frac{P \times r \times (1+r)^t}{(1+r)^t-1}      ................1

here P is Loan Amount and r is rate and t is time period  

put here value and we get  

EMI = \frac{40000 \times 0.06 \times (1+0.06)^7}{(1+0.06)^7-1}    

EMI = $7165.40  

now

we get here interest for second year that is

Closing balance at year 1 = opening balance + Interest - EMI Payment

Closing balance at year 1 =  $40,000  + $2400 - $7165.40  

Closing balance at year 1 =   $35234.60

so Interest for second year $2,114.08

8 0
4 years ago
Other questions:
  • Binita contributed property with a basis of $40,000 and a value of $50,000 to the BE Partnership in exchange for a 20% interest
    13·1 answer
  • A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of th
    10·1 answer
  • Cash 30,000 Accounts receivable 65,000 Inventory 72,000 Marketable securities 36,000 Prepaid expenses 2,000 Intangible assets 40
    7·1 answer
  • QUESTION 23
    14·1 answer
  • "helen is a u.s. citizen and cpa, who moved to london, england three years ago to work for a british company. this year, she spe
    12·1 answer
  • On december 31, 2019, spearmint inc issued
    10·1 answer
  • Goodstone Tire Corporation sells tires for $90 each. Per-unit costs associated with producing and selling the tires are: Direct
    7·1 answer
  • In the context of a job advertisement, what does 'self-starting' mean?​
    13·1 answer
  • If a company incorrectly records cash received for services to be provided in the future with a debit to cash and a credit to sa
    7·1 answer
  • One of the most important in-store factors is the salesperson. This influence can be understood in terms of ________ theory, whi
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!