Business, 17.08.2021 02:20 saeedalr366
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest is 3.8%. Your broker suggests that you add Hannah Corporation to your portfolio. Hannah Corporation has an expected return of 20%, a volatility of 60%, and a correlation of 0 with the Natasha Fund.
a. Calculate the required return of Hannah stock. Is your broker right?
b. You follow your broker's advice and make a substantial investment in Hannah stock so that, considering only your risky investments, 64% is in the Natasha Fund and 36% is in Hannah stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah. Re-calculate the required return on Hannah stock. Is your finance professor right?
c. You decide to follow your finance professor's advice and reduce your exposure to Hannah. Now Hannah represents 15.675% of your risky portfolio, with the rest in the Natasha fund. Re-calculate the required return on Hannah stock. Is this the correct amount of Hannah stock to hold?
d. Calculate the Sharpe ratio of each of the three portfolios. What portfolio weight in Hannah stock maximizes the Sharpe ratio?
Answers: 3
Other questions on the subject: Business
Business, 22.06.2019 11:30, laylay120
You've arrived at the pecan shellers conference—your first networking opportunity. naturally, you're feeling nervous, but to avoid seeming insecure or uncertain, you've decided to a. speak a little louder than you would normally. b. talk on your cell phone as you walk around. c. hold an empowered image of yourself in your mind. d. square your shoulders before entering the room.
Answers: 2
Business, 22.06.2019 21:00, jonathanvega424
There is just one person in our group, silvia, who seems to have radically different ideas about how to complete our project. she seems to purposely disagree with the majority opinions of the rest of us though yesterday she said something that made a lot of sense to us solve our production problem. i suggested to the entire group today that we hear silvia’s suggestions and asked silvia to share in-depth more of what she said yesterday. i am using which adaptive leader behavior?
Answers: 2
Business, 23.06.2019 00:30, danny123421
It's possible for a debt card transaction to bounce true or false
Answers: 1
You know the right answer?
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an exp...
Questions in other subjects:
Social Studies, 29.06.2021 02:40
Mathematics, 29.06.2021 02:40
Chemistry, 29.06.2021 02:40
