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lord [1]
2 years ago
13

A portfolio is entirely invested into BBB stock, which is expected to return 16.4 percent, and ZI bonds, which are expected to r

eturn 8.6 percent. Stock BBB comprises 48 percent of the portfolio. What is the expected return on the portfolio
Business
1 answer:
Mashutka [201]2 years ago
7 0

Answer:

the expected return on the portfolio is 12.34%

Explanation:

The computation of the expected return on the portfolio is shown below:

Expected Return is

= Investment in BBB ×  Return+ Investment in ZI × Return  

= 16.4 × 48% + 8.6 ×52%      

= 7.87% + 4.47%    

= 12.34%

hence, the expected return on the portfolio is 12.34%

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Answer:

The second option is the cheapest.

Explanation:

Giving the following information:

The first company offers free installation and equipment, but will charge you $401.00 per year forever. The second company charges $783.00 for installation, but will charge you $204.00 per year forever. Assume that payments are at the END of the year. Your personal interest rate is 5.00% per year

To calculate the present value, we need to use the formula for a perpetual annuity:

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i= interest rate

Option 1:

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Option 2:

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Suppose the market follows a single index model, where the index has standard deviation of 15%. For a stock with firm-specific r
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Answer:

Explanation:

St deviation of stock σ = √( β² x σ₁² + σ₂² )

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β² x .0225 = .08

β² = 3.5555

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3 years ago
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