Based on current dividend yields and expected capital gains, Ask an Expert

Economics

Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 11% and 14%, respectively. The beta of A is .8 while that of B is 1.5. The T-bill rate is currently 6%, while the expected rate of return of the S and P 500 index is 12%. The standard deviation of portfolio A is 10% annually, while that of B is 31%, and that of the index is 20%.

a. If currently hold a market-index portfolio, would you choose to add either of these portfolios to your holdings? Explain.

b. If instead you could invest only in bills and one of these portfolios, which would you choose?

View complete question

Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9472694

Have any Question?Write your Review or question?

Related Questions in Macroeconomics

Analyze the concept of exchange rateexplain how the dollar

Analyze the concept of exchange rate. Explain how the dollar price of Euros is determined. Identify a factor that can increase the dollar price of Euros. Identify a factor that can decrease the dollar price of Euros. Exp ...

Question - suppose that a consumer can earn a higher wage

Question - Suppose that a consumer can earn a higher wage rate for working overtime. That is, for the first q hours the consumer works, he or she receives a real wage rate of w1, and for hours worked more than q he or sh ...

Question - the space below shows the budget constraint

Question - The space below shows the budget constraint between food (F) and non-food consumption (X). This household has $800/month to spend on the two goods, the price of food = $4/unit and PX = 1. Label both axes and b ...

Assignment -part 1 -brief description of the company - name

Assignment - PART 1 - BRIEF DESCRIPTION OF THE COMPANY - Name of your company and ASX code Why did you chose this company What do you know about this company Number of shares purchased (show calculations) Total amount of ...

Question marketing plan target markets swot and current

Question: Marketing Plan: Target Markets, SWOT, and Current Marketing Mix Extend the analysis of the target market by profiling three different groups, ranking them in priority order, and discussing the differences in ea ...

Question the discussion answers must be a minimum of 125

Question: The discussion answer(s) must be a minimum of 125 words of substance with any references cited in APA format. No copying and pasting of work previously done for someone else. Business Growth Strategy - Horizont ...

Question - in this question i will guide you through a

Question - In this question, I will guide you through a simple AK model. The so-called AK model is a special case of the Solow Model. The production function is simply Y = AK so 1/3 for capital in the last question becom ...

Question - suppose that die number of garden benches

Question - Suppose that die number of garden benches produced by 0, 1, 2, 3, and 4 workers is 0, 39, 78, 99, and 108. Calculate the marginal and average products of labor that would have resulted. Check that the relation ...

Question pepsico produces both a cola and a major brand of

Question: PepsiCo produces both a cola and a major brand of potato chips. Coca-Cola produces only drinks. When might it make sense for PepsiCo to divest its potato chip operations? For Coca-Cola to begin manufacturing sn ...

Question consider the following utility function and

Question: Consider the following utility function and corresponding marginal rate of substitution for consumption, C and leisure, and L: U = and MRS = The consumer's income is $100, PL = 16.67, and PC = 10. Utility funct ...

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 Macroeconomics Expert