QUESTION 15 You borrowed $6,000 at the risk free rate and invest the $6,000 together with $10,000 of your own money in a risky portfolio P. What is your portfolio's weight in the risk-free asset? -0.6 0.8 1.6 O 0.2
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- QUESTION 15 If you invest $45,000 in the market index and $30,000 in a risk free investment what is the beta risk of your investment? O 0.30 O 0.40 O 0.45 0.60QUESTION 5 Exhibit 6.15 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Asset (A) Asset (B) E(RA) = 14% E(RB) = 16% (σA) = 13% (σB) = 18% WA = 0.4 WB = 0.6 COVA,B = 0.0024 Refer to Exhibit 6.15. What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation ( σ i ), covariance (COVi,j), and asset weight (Wi) are as shown above? a. 15.2% b. 13.8% c. 16.8% d. 14.6% e. 15.0%P QUESTION 21 Answer You invest $100 in a risky asset with an expected rate of return of 0.169 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05. How to form a portfolio that has an expected outcome of $129? For the toolbar, press ALT+F10(PC) or ALT+FN+F10(Mac). BIUS Paragraph Arial 10pt T πT< 土 √ TT E AV ㄧˇ Ix 田く 田里 训
- QUESTION 6 Suppose that at a particular instant you observe the following situation: Security A B C B₁ 0.5 1.5 1.2 6% 12% 20% Show how one can design an (arbitrage) investment strategy that would result in a positive return with a zero beta (Hint: you need to buy security C by shorting securities A and B).Question 4 Suppose the risk-free rate is 5%. The expected return and standard deviation of a risky asset are 10% and 20%, respectively. If an investor invest 25% of her money in the risky asset, which is the investor's risk aversion coefficient? 1 3 5 4A 24 Q Search Consider the two cash flows 100 20 0 1 2 3 4 5 0 1 2 3 4 5 Assume the interest rate is 6%. What is the value of C such that the two cash flow are equivalent? Answers: 156.2 166.7 182.4 172.8 OPuestion 5 of 25 2020-10.4. 5292 OCT NPOGX 28
- АВ С 8% 13% 5% Asset Return Standard Deviation12%20%0% Cov(A,B) There are two types of investors in the market. Investor X: has a Risk aversion level of 0.5 Investor Y: has a Risk aversion level of 4.5 For both investors find the respective weights of assets in (1) optimal risky portfolio and the (2) optimal complete portfolio given the following market situations: Lending is allowed at risk-free rate and rowing is allowed at 7% 72Wich blank woting all diectors p for electics same time in one 20. A bank with long-term fixed-rate assets fundded with short-term rate-sensitive labilities could do which of the following to limit their interest rate risk? L Buy a cap II. Buy an interest rate swap II1. Buy a floor IV. Sell an interest rate swap A. I and II only B. III cely C. I and IV only D. II and IIl only E. IIl and IV cnly at a floating rate of interest. What kind of risk does the subsidiary have? What kind of vwap Be specific. 21. A U.S. firm has a European subsidiary that earns euros. The subsidiary has berowed delarsRisky Asset E(r) σ (std dev) PA,B 20% 0.30 9% 5% 10% *Rate on Treasure bills (risk-free rate of return) is 2% Given your client's risk assessment survey, you feel a portfolio with moderate risk would be most appropriate. Therefore, you decide to recommend a portfolio with a standard deviation equal to 20%. Given the three financial assets above (A, B, and the risk-free asset), what's the best possible expected return you can generate for your client given this level of risk? Multiple Choice О O 10.11% 6.60% 10.61% 9.17%
- ✓ Question 4 FI Two assets, Q & R, each have an expected return of 11.75%. Asset Q's standard deviation is 13% and Asset R's standard deviaion is 13.2%. A rational investor will choose: A. Either asset R or asset Q. B. Asset R. C. Asset Q. Question 5 Answers: 2 An investor whose portfolio is not diversified is subject to: Answers: A. systematic risk. Thursday, June 30, 2022 2:15:10 AM EDT W 4+ *3 B. non-systematic risk. C. both systematic risk and non-systematic risk. E $ 4 F4 R с F5 % 5 T F6 6 H Y F7 & 7 F8 U * 00 8 F9 81 L ( 9 F10 - F11 0 *+ F12 P PrtSc [ # 0 c Del Ba¥ Question Completion Status: QUESTION 3 Mr. Adel Owns 200 sahres in XYZ LTD. ahe fears that the price might decline next montha and he wants to make a hedge against this risk. What option shall he byu? O 1. Future Option O 2. Call option 3. Forward Option 4. Put option QUESTION 4 The risk that the due to global warming there might be hurricane in Bahrain. This is risk is part of - O 1. Enterprise risk management 2. Financial risk management 3. Speculative risk amangement 4. General risk amangement Click Save and Submit to save and submit. Click Save All Answers to save all answers.Q2 Your investment client has been offered the following two mutually exclusive investments: Year Investment A Investment B 0 (400,000) (450,000) 1 75,000 60,000 2 75,000 60,000 3 100,000 125,000 4 100,000 125,000 5 100,000 125,000 6 140,000 125,000 (i) Calculate the Payback period and the…