Business, 17.08.2021 02:20 saeedalr366
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest is 3.8%. Your broker suggests that you add Hannah Corporation to your portfolio. Hannah Corporation has an expected return of 20%, a volatility of 60%, and a correlation of 0 with the Natasha Fund.
a. Calculate the required return of Hannah stock. Is your broker right?
b. You follow your broker's advice and make a substantial investment in Hannah stock so that, considering only your risky investments, 64% is in the Natasha Fund and 36% is in Hannah stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah. Re-calculate the required return on Hannah stock. Is your finance professor right?
c. You decide to follow your finance professor's advice and reduce your exposure to Hannah. Now Hannah represents 15.675% of your risky portfolio, with the rest in the Natasha fund. Re-calculate the required return on Hannah stock. Is this the correct amount of Hannah stock to hold?
d. Calculate the Sharpe ratio of each of the three portfolios. What portfolio weight in Hannah stock maximizes the Sharpe ratio?
Answers: 3
Business, 22.06.2019 19:20
Six years ago, an 80-kw diesel electric set cost $160,000. the cost index for this class of equipment six years ago was 187 and is now 194. the cost-capacity factor is 0.6. the plant engineering staff is considering a 120-kw unit of the same general design to power a small isolated plant. assume we want to add a precompressor, which (when isolated and estimated separately) currently costs $13291. determine the total cost of the 120-kw unit. (hint: skip $ and comma symbols)
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Business, 22.06.2019 19:30
Which of the following constitute the types of unemployment occurring at the natural rate of unemployment? a. frictional and cyclical unemployment.b. structural and frictional unemployment.c. cyclical and structural unemployment.d. frictional, structural, and cyclical unemployment.
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Business, 22.06.2019 20:00
Richard is one of the leading college basketball players in the state of florida. he also maintains a good academic record. looking at his talent and potential, furman university offers to bear the expenses for his college education.
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You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an exp...
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