am. 83. You have $10,000 to invest in a combination of a risk-free asset (f), an S&P 500 index fund (S), and a corporate bond fund (B) with the following properties:Expected return RiskAssetRisk-free assetS&P 500 index fund0.050.120.000.19Corporate bond fund 0.055The correlation of the returns on the corporate bond fund and the stock index fund is equal to 0.30.Select which portfolio below is closest to the tangency portfolio.Group of answer choices0.10None of these portfolios can be the tangency portfolio, as the tangency portfolio combines both risk-free and risky assets60% invested in S and 40% in B (assume that the risk of this portfolio is 0.1317)90% invested in S and 10% invested in B (Assume that the risk of this portfolio is 0.1743)20% invested in S and 80% invested in B (Assume that the risk of this portfolio is 0.0983)30% invested in S and 70% invested in B (Assume that the risk of this portfolio is 0.1027)

To determine which portfolio is closest to the tangency portfolio, we need to calculate the expected…

Answered: You have $10,000 to invest in a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider that 2 investment funds exist. ABC Fund(invested in 50% normal stock and 50% risky bonds) and 123 Fund(invested in 25% High risk stock and 75% normal bonds). Assume you have the following historical data of annual returns: Return S.D. Normal Stock 8% 20% Risky Bonds 10% 35% High Risk Stock 14% 40% Normal Bonds 6% 10% A) If Normal Stock and Risky Bonds have a correlation coefficient of 0.4 and High Risk Stock and Normal Bonds have correlation coefficient of 0 .2. Find the expected return and standard deviation of each Fund. B) Consider that 2 investment funds exist. ABC Fund(invested in 50% normal stock and 50% risky bonds) and 123 Fund(invested in 25% High risk stock and…
Only do question B Consider that 2 investment funds exist. ABC Fund(invested in 50% normal stock and 50% risky bonds) and 123 Fund(invested in 25% High risk stock and 75% normal bonds). Assume you have the following historical data of annual returns: Return S.D. Normal Stock 8% 20% Risky Bonds 10% 35% High Risk Stock 14% 40% Normal Bonds 6% 10% A)If Normal Stock and Risky Bonds have a correlation coefficient of 0.4 and High Risk Stock and Normal Bonds have correlation coefficient of 0 .2. Find the expected return and standard deviation of each Fund. B)Find the optimal risky portfolio if you could only use these two funds; assume the two funds have a correlation coefficient of 0.3. (To do…
Calculate the required rate of return for the Wagner Assets Management Group, which holds 4 stocks. The market's required rate of return is 17.0%, the risk-free rate is 7.0%, and the Fund's assets are as follows: Stock Investment Beta A $200,000 1.50 B 300,000 −0.50 C 500,000 1.25 D 1,000,000 0.75 Select the correct answer
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Calculate the net asset value per share (NAVPS) for a mutual fund with the following values. Market value of securities in the portfolio $1.2 billion Liabilities of the fund $39.3 million Shares outstanding 52 million The NAVPS for this mutual fund is $ (Round your answer to the nearest cent.)
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Suppose you manage an equity fund with the following securities. A client invests partially in your fund and partially in Treasury Bills. The Crown and Rose Fund Expected Return Percent of Portfolio Burrfoot Enterprises 9.50% 15% Majere Brothers, Incorporated 13.50% 20% Uth Matar Limited 4.50% 10% Lance Medical Supplies 16.50% 35% Starbreeze Jetliners 18.50% 20% Market Data Rate of Return Standard Deviation Treasury Bills 2.50% 0.00% S&P 500 12.00% 20.00% Investor Data Portfolio Composition Standard Deviation Treasury Bills 30.00% 0.00% The Crown and Rose Fund 70.00% 20.00% Required: Using the information in the table above, please first calculate the expected return of the fund and the expected return and standard…

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