You are considering investing $1,000 in a complete portfolio. The complete portfolio is composedof Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X andY. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate ofreturn of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with anexpected rate of return of 8%, you should invest approximatelyin the risky portfolio.This will mean you will also invest approximatelyportfolio in security X and Y, respectively.andof your complete0%; 60%; 40%25%; 45%; 30%40%; 24%; 16%50%; 30%; 20%

Expected return of risky portfolio = 0.60*14 + 0.40*10 % = 12.40% let the investment in a risky…

Answered: You are considering investing $1,000 in…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 5P

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You are considering investing $1,100 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 15%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 7%, you should invest approximately __________ in the risky portfolio. This will mean you will also invest approximately __________ and __________ of your complete portfolio in security X and Y, respectively.
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has a return volatility of 25%, and Y has a return volatility of 30%. The correlation between X and Y is -0.2. If you decide to hold a complete portfolio that has a return volatility of 15%, how much should you invest in the Treasury bills? $1,000 $687 $130 $220
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You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 4% and a risky portfolio, P, constructed with 2 risky securities X and Y. The optimal weights of X and Y in P are 40% and 60% respectively. X has an expected rate of return of 18% and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 9 %. The risky portfolio, P, has a standard deviation of 25 %. What is the 5% Value at Risk (VaR) for the expected return on the risky portfolio P? Please calculate the VaR as a percentage.
You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 2.5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 35% and 65%, respectively. X has an expected rate of return of 21%, and Y has an expected rate of return of 9%. The dollar values of your position in Y would be _________, if you decide to hold a complete portfolio that has an expected return of 11%. Note
You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of Treasury notes that pay 5% and a risky portfolio, P, constructed with two risky securities X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14% and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 11%, you should invest ________ of your complete portfolio in Treasury notes.
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