34.A loan for a new car costs the borrower .8% per month. What is the EAR? 10.03% 6.87% .80% 9.6% 56.An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5% plus she puts 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are ________ and ________, respectively. 12%; 15.7% 10%; 35% 10%; 6.7% 12%; 22.4%
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10.03%
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6.87%
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.80%
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9.6%
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56.An investor invests 70% of her wealth in a risky asset with an expected
12%; 15.7%
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10%; 35%
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10%; 6.7%
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12%; 22.4%
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- Being Finance Manager of Salalah Textiles Industries, you need to invest an amount for OMR 50,000 in the investment market. Assume the market rate of return is 0.11, risk free rate of return is 2.75% and Beta is .73, then:Required:a) What should be required rate of return for your investment?Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of .5. The alternative risk-free investment in T-bills pays 6% per year.a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio?b. Suppose that the portfolio can be purchased for the amount you found in (a). What will be the expected rate of return on the portfolio?c. Now suppose that you require a risk premium of 12%. What is the price that you will be willing to pay?d. Comparing your answers to (a) and (c), what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell?Suppose you have $2,000 to invest. The market portfolio has an expected return of 10.5 percent and a standard deviation of 16 percent. The risk-free rate is 3.75 percent. How much should you invest in the risk-free asset if you wish to have a 15 percent return on the portfolio?
- You have $5000 to invest for 1 year. Fund A has an estimated 4% annual return, and Fund B has an estimated 10% annual return. Fund A is more stable, and preferred among investors with low risk tolerance. Fund B is less stable, but has larger returns. Answer the following questions about this investment opportunity. 1. Suppose you have a low risk-tolerance, and you invest everything in Fund A. How much do you expect to make on your investment?Round to the nearest cent. 2. Suppose you have a medium risk-tolerance, and you want an annual return of $355. You decide to invest part in Fund A and the rest in Fund B. How much do you need to invest in Fund A?A client wants to invest 44% of her money in a portfolio of risky assets and the rest in Treasury bills (the risk-free asset). The expected return on the risky portfolio is 25.4% and the standard deviation, is 10.6%. T-bills pay 3%. What is the risk of the client's complete portfolio? Enter your answer as a % with one decimal (e.g., 20.5)g. ABC Bank has two loans of $20,000 each, with the following characteristics: Loan A has an expected return of 10 percent and a standard deviation of returns of 10 percent. The expected return and standard deviation of returns for loan B are 12 percent and 20 percent, respectively. What is the expected return of this portfolio?
- Suppose you borrow $42,121.59M when financing a gym which cost is at $90,956.02M. You expect to generate a cash flow of $47,287.93M at the end of the year if demand is weak, $87,482.45M if demand is as expected and $107,854.66M if demand is strong. Each scenario is equally likely. The current risk-free interest rate is 5.42% (risk of debt) and there's a 12.67% risk premium for the risk of the assets. What is the expected return of equity?An investor has to decide how much he will be willing to pay for an investment that generates the following stream of future cash flows: Yr1 = 35, Yr2 = 40, Yr3 = 45, Yr4 = 50, Yr5= 55. His minimum required rate of return is 9 percent. How much should he be willing to pay for it today?Suppose that you have $1 million and the following two opportunities from which to construct a portfolio: a. Risk-free asset earning 13% per year. b. Risky asset with expected return of 27% per year and standard deviation of 40%. If you construct a portfolio with a standard deviation of 28%, what is its expected rate of return? (Do not round your intermediate calculations. Round your answer to 1 decimal place.) Expected return on portfolio %
- Consider when you decide to invest 40% of your money in risky portfolio P( with the expected return of 25% and standard deviation of 20%) and invest 60% of your money into a treasury bill) the rate of the TBill is 5%). Assume that in thi s investment you use all the money you have on your own without borrowing from outside. What's the sharp ratio? 0.670? 1.000? 1.625? 0.400?Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $110,000 or $280,000 with equal probabilities of .5. The alternative risk-free investment in T-bills pays 6% per year. a. If you require a risk premium of 4%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest whole dollar amount.) b. Suppose that the portfolio can be purchased for the amount you found in (a). What will be the expected rate of return on the portfolio? (Round your answer to the nearest whole number.)Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $150,000 or $290,000 with equal probabilities of 0.5. The alternative risk-free investment in T-bills pays 3% per year. Required: a. If you require a risk premium of 7%, how much will you be willing to pay for the portfolio? b. Suppose that the portfolio can be purchased for the amount you found in (a). What will be the expected rate of return on the portfolio? c. Now suppose that you require a risk premium of 12%. What price are you willing to pay? Complete this question by entering your answers in the tabs below. Required A Required B Required C If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? Note: Do not round your intermediate calculations. Round your answer to the nearest whole dollar amount. Price Required A Required B >