You Currently Own $100,000 Worth of Walmart Stock

question 50

Essay

You currently own $100,000 worth of Walmart stock.Suppose that Walmart has an expected return of 14% and a volatility of 23%.The market portfolio has an expected return of 12% and a volatility of 16%.The risk-free rate is 5%.Assuming the CAPM assumptions hold,what alternative investment has the highest possible expected return while having the same volatility as Walmart? What is the expected return of this portfolio?

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Definitions:

Humanistic

A psychological perspective that emphasizes the study of the whole person and the uniqueness of each individual's experience.

Behavioral

Pertains to the actions or reactions of a person or animal in response to external or internal stimuli.

Sociocultural

Pertaining to the combination of social and cultural factors and their influence on individual behavior and society.

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a comprehensive classification of officially recognized psychiatric disorders.