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Assume That Both Apple and Yahoo Plot on the SML

question 18

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Assume that both Apple and Yahoo plot on the SML.Apple has a beta of 2.6 and an expected return of 21.2%.Yahoo has a beta of 0.90 and an expected return of 9.3%.The expected return on the market portfolio is 10%and the risk-free rate is 3%.If you wish to hold a portfolio consisting of Apple and Yahoo and have a portfolio beta equal to 1.5,what proportion of the portfolio must be in Apple? What is the expected return on the portfolio? Assume that both Apple and Yahoo plot on the SML.Apple has a beta of 2.6 and an expected return of 21.2%.Yahoo has a beta of 0.90 and an expected return of 9.3%.The expected return on the market portfolio is 10%and the risk-free rate is 3%.If you wish to hold a portfolio consisting of Apple and Yahoo and have a portfolio beta equal to 1.5,what proportion of the portfolio must be in Apple? What is the expected return on the portfolio?


Definitions:

Sequential Function Chart

A graphical programming language used in PLC programming, representing the sequence of operations or steps in a process.

Instruction Y

A placeholder for a specific, yet undefined, instruction within a programming or control system context.

Examine If Closed

A control logic command used to check if a switch or contact is in the closed (conducting) state in programming languages.

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