Rachel is a financial investor who actively buys and sells in securities market. now she has a portfolio of all blue chips include $ 13500 of share A , $7600 of share B $ 14700 of share C and $5500 of share D . a compute the weight of the assets in Rachel's portfolio. b if Rachel's portfolio has provided her with returns of 9.7% , 12.4% , -5.5% and 17.2 % over the past 4 years respectively, calculate the geometric averages return of the portfolio for this period. c Assume that expected return of stock A in rachel's portfolio is 13.6% this year. the risk premium on the stock of the same industry are 4.8% bet as of these stocks is 1.5 and inflation rate was 2.7% calculate the risk free rate of return using capital markets asset price model . following is forcast for economic situation and rachel's portfolio return next year. calculate the expected return variances and standard duration of the portfolio .
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Rachel is a financial investor who actively buys and sells in the securities market. Now she has a portfolio of all blue chips, including: $13,500 of Share A, $7,600 of Share B, $14,700 of Share C, and $5,500 of Share D. Required: a) Compute the weights of the assets in Rachel's portfolio? b) If Rachel's portfolio has provided her with returns of 9.7%, 12.4%, -5.5% and 17.2% over the past four years, respectively. Calculate the geometric average return of the portfolio for this period. c) Assume that expected return of the stock A in Rachel's portfolio is 13.6% this year. The risk premium on the stocks of the same industry are 4.8%, betas of these stocks is 1.5 and the inflation rate was 2.7%. Calculate the risk-free rate of return using Capital Market Asset Pricing Model (CAPM). d) Following is forecast for economic situation and Rachel's portfolio returns next year, calculate the expected return, variance and standard deviation of the portfolio. State of economy Mild Recession Growth Strong Growth Probability 0.35 0.45 0.20 Rate of returns
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