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Author Question: Assume that the capital market is in equilibrium, the risk free rate is 2%, and the return on the ... (Read 21 times)

imanialler

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on: Apr 25, 2021

Question 1

AssetExpected ReturnBeta
Stock A9%0.9
Stock B11%1.4
Risk-Free Asset5%​
Consider the assets outlined in the table above. Which asset offers the best risk-return trade-off?
◦ Stock A
◦ Stock B
◦ The risk-free asset
◦ Either Stock A or Stock B as both have the same risk-return trade-off

Question 2

Assume that the capital market is in equilibrium, the risk free rate is 2%, and the return on the market is 12%. You want to construct a portfolio on the SML with an expected return of 16%. What are the portfolio weights?
◦ -0.4, 1.4
◦ -0.1, 1.1
◦ 0.2, 0.8
◦ 0.4, 0.6
◦ 0.4, -1.4
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by imanialler on Apr 25, 2021

vkodali

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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imanialler

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Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

elyse44

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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