i need the answer quickly The efficient frontier represents acombination of which of the following?a. Only portfoliosb. A portfolio of risky assetsC. A set of portfolios with a maximumexpected rate of return to a given riskd. Single assets○ a.a. a, b, dO b. a, b, c.O c. d, b, cO d. a, b, c and d

The efficient frontier represents a combination of:a. Only portfoliosb. A portfolio of risky…

Answered: The efficient frontier represents a…

Business

Finance

The efficient frontier represents a combination of which of the following? a. Only portfolios

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Chris Spear invested $12,000 today in a fund. To what amount would the investment grow in 3 years if…

A: Here,Amount invested today (PV) is $12,000Time Period (n) is 3 yearsInterest Rate (r) is…

Q: Based on the corporate valuation model, the value of Virtual Homes Co.'s operations is $1.15…

A: Introduction:The value of stock can be determined by using the corporation valuation model where…

Q: Power Manufacturing has equipment that it purchased 5 years ago for $1,850,000. The equipment was…

Q: The risk free rate is 5% per period and a(non - income paying) security has a current price of $300…

A: Current price = $300Price upward (rise) = $360Price downward (fall) = $240Size of up move = U =…

Q: Rottweiler Obedience School's December 31, 2021, balance sheet showed net fixed assets of…

A: Closing net fixed assets = opening net fixed assets + Net capital spending during the year -…

Q: do yo predict will happen the market equilibrium price of bonds if the yield to maturity on be is…

A: Yield to maturity is the rate of return realized on bond when bond is held till the maturity of the…

Q: The current zero-coupon yield curve of semi-annually compounded rates for risk- free bonds is as…

A: The objective of the question is to calculate the price of a semi-annual coupon bond given the yield…

Q: A 25-year bond with a par value of 1,000 and 10% coupons payable quarterly is selling at 925.…

A: Maturity period25Payments per year4Annual coupon rate10%Par value1000Selling price925

Q: Suppose you purchase a 10-year bond with 6.4% annual coupons. You hold the bond for four years, and…

A: A bond pays regular coupons over the period of investment along with par value at the end of the…

Q: A proposed cost-saving device has an installed cost of $825,000. The device will be used in a…

A: Pre-tax cost savings will be the cash flow before deducting taxes and the depreciation amount. If…

Q: Which of the following can be facilitated through your brokerage firm Providing investment…

A: The question is asking about the services that can be facilitated through a brokerage firm.…

Q: D21 5 6 7 A B fx C D E F G H 8 Price per share 9 Shares outstanding 8,000,000 22.00 Face value of…

A: Before-tax cost of equity18.64%Before-tax cost of debt7.55%Equity weight82.40%Debt…

Q: (a) How many years will it take for $7500 to accumulate to $9517.39 at 3% compounded semi-annually?…

A: The money that you have today is valuable more than the same amount in the future due to the time…

Q: A property gets following Cash flows: NO, 5th year is constant with 2% the r = 12%. = 100,000…

A: The objective of the question is to calculate the present value of the property considering the…

Q: 18 A company has a machine which will continue to function for the next five years, but gradually…

A: The objective of this question is to calculate the net present value (NPV) of the proposal to…

Q: You are the loan department supervisor for a bank. This installment loan is being paid off early,…

A: The answer is: Rebate Fraction = 0.83 Finance Charge Rebate = $648.22 Loan Payoff = $1,151.78…

Q: U.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened,duplex,…

A: TVM refers to the capacity of money to earn interest because money earned earlier is considered more…

Q: You find a zero coupon bond with a par value of $10,000 and 18 years to maturity. The yield to…

A: Bonds are debt instruments issued by companies. The issuing company pays periodic coupons or…

Q: Consider the two (excess return) Index-model regression results for stocks A and B. The risk-free…

A: Market return = 11%Risk free rate = 4%To find Alpha, Information ratio, Sharpe ratio, and Treynor…

Q: The following table summarizes prices of various default-free zero-coupon bonds (expressed as a…

A: Yield to maturity can be refers as the interest rate on bond that can be expected by a bondholder if…

Q: The cost of a college education is currently $15,000 per year. The expected annual inflation rate…

A: To cover a $15,000 college education in 5 years with 3% annual inflation, you need to deposit…

Q: The balance on a credit card, that charges a 12% APR interest rate, over a 1 month period is given…

A: Finance Charge is the interest charged by credit card companies over an outstanding amount. Average…

Q: A bond, paying semi-annual coupons of $42, is purchased at a discount to yield j2 9%. The book value…

A: The objective of the question is to find the purchase price of a bond that pays semi-annual coupons…

Q: efficient of variation. Do not round intermediate calculations. Round your answers to two decimal…

A: The market risk premium, often referred to simply as the "risk premium," is a key concept in finance…

Q: k algo 10-31 Cash Flows And NPV The Bruin's Den Outdoor Gear is considering a new 6-year project to…

A: The objective of this question is to calculate the Net Present Value (NPV) of a new project that The…

Q: King, Incorporated, has debt outstanding with a face value of $5.4 million. The value of the firm if…

A: financial distress cost refers to cost which is incurred for eliminating the amount of debt that…

Q: Calculate the table factor, the finance charge, and the monthly payment (in $) for the loan by using…

A: To calculate the table factor, finance charge, and monthly payment for a loan with an amount…

Q: Briefly explain the following life insurance contractual provisions. Suicide clause Grace period…

A: The objective of this question is to understand the meaning and implications of three specific…

Q: Nifty Dashboards just paid a dividend of Do = $1.28. Analysts expect the company's dividend to grow…

A: The Dividend Discount Model (DDM) is a method used to value a company's stock by estimating the…

Q: Q1) A Zero-Coupon Bond with maturity in 5 years produces a gross yield of 2.2% p.a. effective and…

A: Given information:Redemption value (face value at maturity): £100Effective yield (gross yield): 2.2%…

Q: Klingon Widgets, Incorporated, purchased new cloaking machinery three years ago for $5.2 million.…

A: Net working capital(NWC) = Current assets - Current liabilities=>Current assets = Net working…

Q: Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this,…

A: Given:EBIT for a 40-hour week: $555,000EBIT for a 50-hour week: $635,000Company's worth: $3.25…

Q: A stock price is $30. An investor buys one call option contract on the stock with a strike price of…

A: The possible profit or loss that an investor may experience after purchasing a call option at $28…

Q: a. Use the appropriate formula to determine the periodic deposit. b. How much of the financial goal…

A: Periodic deposits in the given case can be the annual payments or annual deposits that can be made…

Q: Darwin Enterprises Financial Information Year 1 Year 2 Year 3 Turnover (Em) 11.40 10.60 8.50 Income…

A: A stock is a capital market security which offers the ownership of the underlying company to the…

Q: Consider the CAPM. The risk - free rate is 4%, and the expected return on the market is 15% .…

A: Risk-free Rate, Rf = 4%Beta = 1.2Expected return on market = 15%

Q: The price of a 20-year bond that has a coupon rate of 8% is $1100.The bond pays semiannual coupon.…

A: Calculate the semiannual coupon payment:Coupon rate = 8%Since payments are semiannual, divide the…

Q: Hyacinth Macaw invests 45% of her funds in stock I and the balance in stock J. The standard…

A: Proportion invested in I = 45%Standard deviation of I = 17%Standard deviation of J = 30%To find:…

Q: Beta Company re-invests all of its earnings to fund growth, so they expect to pay no dividends for…

A: Price of the stock is $ 9.65/. Explanation:

Q: A project has an initial cost of $18,400 and produces cash inflows of $7,200, $8,900, and $7,500…

A: The discounted payback period is a financial metric used to evaluate the time it takes for an…

Q: Assume that you manage a risky portfolio with an expected rate of return of 14% and a standard…

A: A portfolio is a collection of assets such as stocks, bonds, and other investments held by an…

Q: Princess Cruise Company (PCC) purchased a ship from Mitsubishi Heavy Industry for 520 million yen…

A: Hedging - Hedging can also be used to protect a corporation's balance sheet when it has invested in…

Q: Dizzy Inc. wishes to issue new bonds but is uncertain how the market would set the yield to…

A: Compound = Semiannually = 2Time = t = 20 * 2 = 40Semiannually Coupon Rate = c = 3.5%Face Value = fv…

Q: Please only anser in Excel format, including lay out, formulas and screenshots. mary finds a job…

A: The time value of money is a concept in finance that takes into account the effect of compounding to…

Q: Suppose Alcatel-Lucent has an equity cost of capital of 10.2%, market capitalization of $11.20…

A: Years0123FCF-$100.00$55.00$103.00$74.00Debt$38.84$31.34$13.57$0.00Interest$0.00$2.52$2.04$0.88Equity…

Q: mashed Pumpkins Company paid $112 in dividends and $547 in interest over the past year. The company…

A: EBIT (Earnings Before Interest and Taxes) is a financial metric that represents a company's…

Q: How much money must you invest now at 4.1% interest compounded continuously in order to have $10,000…

A: In case of continuous compound,Future value = Present value x e ^(r x t)whereFuture value = amount…

Q: If $1125.00 accumulates to $1248.19 in two years, six months compounded semi-annually, what is the…

A: The objective of the question is to find the effective annual rate of interest when the principal…

Q: A firm that purchases electricity from the local utility for $300,000 per year is considering…

A: Electricity from local utility costs = $300,000 per yearInstallation cost of generator =…

Q: Consider the following project: Period 0 1 2 Net cash flow -100 0 78.55 3 78.55 The internal rate of…

A: When there is a change in the economic value of the asset and leads to a decline in the value over…

Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

Question

i need the answer quickly

The efficient frontier represents a
combination of which of the following?
a. Only portfolios
b. A portfolio of risky assets
C. A set of portfolios with a maximum
expected rate of return to a given risk
d. Single assets
○ a.
a. a, b, d
O b. a, b, c.
O c. d, b, c
O d. a, b, c and d

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Choosing the correct option and explaining it

VIEW

Step 2: Explaining why other options are incorrect

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The portfolio opportunity set (i.e., all possible combinations) between two uncorrelated assets is a. a triangle b. a curve c. two straight lines that reach the zero-risk portfolio d. a straight line
vuunyiuunu assumption of "y. Q2. How portfolio return and risk is calculated? Explain the role of correlation among asset in portfolio? Why this correlation is important?
3.1 Show that for any portfolio w = equal to (wi,..., wn) the Beta of the portfolio is Bw = wiB1 + + wn Bn, !! ... where B; for i = 1,...,n are Betas of individual assets.
An efficient portfolio is one that: Select one: a. maximises return for a given level of risk. b. maximises risk for a given level of return. c. minimises risk for a given rate of return. d. Both A and C. are efficient portfolios.
Q .1 What is the Sharpe measure of:i. Portfolio A?ii. Portfolio C?iii. Portfolio E? Q.2 What is the Treynor measure of:i. Portfolio A?ii. Portfolio C?iii. Portfolio E?
2. Suppose that you have a riskfree asset and N risky assets for investment. The rate of return on the riskfree asset is r,, while the (Nx1) vector of the rate of return on the N risky assets is r, which is multivariate normal, i.e., r N(u, E). Your utility function for a portfolio that consists of the riskfree asset and the N risky asset is u(r,)=r,-=o, 2 Suppose that the sum of investment proportions on the riskfree and risky assets is one. Answer the following question. A. What is your optimal investment proportion in the risky assets? How is your investment on the riskfree asset affected by different values of 2? B. Suppose that there is only one risky asset i. Show the effects of the Sharpe ratio (4,/0, ) on the investment proportion in the risky asset.
b. Suppose that you have the following information of three risky assets. Security Return (%) Standard Covariance with Deviation (%) A B A 11 10 4 14 6. 30 17 Risk free rate = 6%, (assume that A = 6). Requirement: Find the optimal portfolio weight of risky assets. How do you allocate the capital between optimal portfolio of risky asset and risk-free assets.
The Capital Market Line (CML) expresses the risk-return trade-off for a portfolio as follows: E(Rport )=RFR+Oport [(E(Rm)-RFR)/om ] Required: Extend this expression to allow for the evaluation of any individual risky Asset i. Explain the steps in details.
Portfolio risk is comprised of risk risk. Select one: O a. firm-specific; plus diversifiable b. systematic; minus unsystematic O c. diversifiable; plus unsystematic O d. market; plus non-diversifiable O e. market; plus firm-specific
(b) The graph below shows possible portfolios with different combinations of risky portfolio and risk-free investment on new efficient frontier. E(R port ) NEW EFFICIENT FRONTIER PA RFR E(o pon) port i. Explain how do investors achieve new efficient frontier. ii. Explain the investor's risk profile of portfolio Pa and portfolio Pg.
As diversification increases, the firm-specific risk of a portfolio approaches A. 1. B. infinity. C. 0. D. (n – 1) × n.
6. Capital market line A. is formed by combining the risk-free asset with an efficient portfolio B. contains portfolios that provide the highest Sharp ratio C. is tangent to the efficient frontier of risky assets D. all of the above