A different analyst uses a twondashfactor apt model to, Ask an Expert

Finance

A different analyst uses a two–factor APT model to evaluate expected returns and risk. The risk premiums on the factor 1 and factor 2 portfolios are 3.25% and 2.48%, respectively, while the risk–free rate of return remains at 2.00%. According to this APT analyst, your portfolio formed in question 2 has a beta on factor 1 of 3.95 and a beta on factor 2 of 3.25. According to APT, what is the expected return on your portfolio if no arbitrage opportunities exist?

2. Stock A has a beta of 1.50 and a standard deviation of return of 32%. Stock B has a beta of 3.50 and a standard deviation of return of 58%. Assume that you form a portfolio that is 45% invested in Stock A and 55% invested in Stock B. Using the information in question 1, according to CAPM, what is the expected rate of return on your portfolio?

View complete question

Financial Management, Finance

Category:- Financial Management
Reference No.:- M92268168

Have any Question?Write your Review or question?

Related Questions in Financial Management

Process improvement projectfor this assignment select

Process Improvement Project For this assignment select either your own organization or an organization about which you know enough to review the supply chain processes and identify a process that can be improved in your ...

Discussion question find an example of a document that

Discussion Question : Find an example of a document that misuses graphics. This can be a document that you have received (please blot out any sensitive information and names) or a document that you find on the Internet. ...

Discussion forumby thursday of this week search current

Discussion Forum By Thursday of this week, search current news (less than 6 months old) and find an article about a company reporting key financial news (e.g., landing a large contract, reporting unusual profits or losse ...

Assume that hos could issue a zero coupon bond at an annual

Assume that HOS could issue a zero coupon bond at an annual interest rate of 4 percent with semiannua compounding for 20 years. If HOS receives $2,264.45 for the bond, how much would it have to pay at the maturity date?

Nbsppad 6227fall2018nbspassignmenteach problem is worth

PAD 6227 Fall2018 Assignment Each problem is worth one-half of the grade for this assignment. Make sure to carefully edit your work. 1. The Department of Revenue wants to add more people to the unit that attempts to co ...

Please respond in about 100 words for each question belowis

Please respond in about 100 words for each question below: Is it really so important for us to be aware of the various styles, the personal behaviors, and the Face to Face communications, at the table? Can it "make or br ...

Scenario 1you know from government legislation that the

Scenario 1) You know from government legislation that the legal tax rate on your property is 2.4% and the city's assessed value of your property is $155,000. However, your property is currently on the market for only $60 ...

Video balance sheet and income statement relationship

Video : Balance sheet and income statement relationship (khanacademy) After watching this video, explain the relationship between the balance sheet and income statement in your own words, assuming that you are talking to ...

Case project managementnote use excel spreadsheetto carry

Case: Project Management NOTE : Use Excel Spreadsheet to carry on this project. Only ONE file is needed for the project. You can use several sheets within the same file. (ODD GROUPS) Dream Team Productions, a firm hired ...

Assignment problems1 on the day harry was born his parents

Assignment Problems 1. On the day Harry was born, his parents put $1600 into an investment account that promises to pay a fixed interest rate of 5 percent per year. How much money will Harry have in this account when he ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Financial Management Expert