deposil paing \( 2 \% \) so that the average return on the fro imestments is \( 2 \% \) ?
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- Jude has $64,000 invested in stocks paying 5%. - The desired average return on the two investments is 3%. - The certificates of deposit pay 2%. Show more…
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An asset X has an expected return of 8% with a standard deviation of 5%. Asset Y has an expected return of 12% with a standard deviation of 6%. The covariance of the returns on the two assets is 0.2. (a) Find the expected return and the standard deviation of the return on a portfolio consisting of 30% of asset X and 70% of asset Y. (b) What will be the answer in the (a) part of the question if the correlation of the returns between two assets is 0.5.
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You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a treasury bill with a rate of return of 5%. What is the proportion of your complete portfolio that should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 9%? What are the proportions of the risky portfolio and risk-free asset when a complete portfolio has an expected value of $1,200 in one year? Draw the CAL of your portfolio on an expected return/standard deviation diagram. What is the slope of the capital allocation line (reward to volatility ratio) formed with the risky portfolio?
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