Use the Information for the Question(s)below

question 70

Essay

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 highest possible expected return while having the same volatility as Wal-Mart? What is the expected return of this portfolio?

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Terminal

An endpoint or interface for entering data into or receiving data from a computer system.

Bit Status

The current state (ON or OFF) of a single binary digit in computer memory or communications, representing the smallest unit of data.

Input Device

A hardware device that allows users to feed data or commands into a computer or electronic system, such as a keyboard, mouse, or scanner.

Output Address

A specific memory location or identifier used to send data or signals from a computer or processor.