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question 116

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Use the information for the question(s)below.
Tom's portfolio consists solely of an investment in Merck stock.Merck has an expected return of 13% and a volatility of 25%.The market portfolio has an expected return of 12% and a volatility of 18%.The risk-free rate is 4%.Assume that the CAPM assumptions hold in the market.
-You currently own $100,000 worth of Wal-Mart stock.Suppose that Wal-Mart 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 lowest possible volatility while having the same expected return as Wal-Mart? What is the volatility of this portfolio?

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Eighth Amendment

Part of the United States Constitution, prohibiting the federal government from imposing excessive bail, excessive fines, or cruel and unusual punishments.

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The first ten amendments to the United States Constitution, guaranteeing fundamental rights and freedoms to American citizens.

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The national government of a country, which holds the highest governmental authority, overseeing the entire nation’s affairs and operations.

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