Use the Information for the Question(s)below

question 116

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

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Definitions:

Analytical Domains

The distinct areas or categories within a field of study or analysis, such as political, economic, or social aspects.

Matrix of Domination

A concept that describes how different social categories such as race, gender, and class intersect to create systems of oppression and privilege.

Collins

A reference could be to Patricia Hill Collins, an American sociologist known for her research and theory on race, gender, and social class in the context of black feminism.

Pan-Indianism

A movement or ideology that promotes unity among different Native American tribes in response to shared social and political challenges.