Suppose the current T-bill rates is 5%, the expected return for stock A is 15%, with a standard deviation of 15%, the ex
Posted: Mon Nov 15, 2021 5:09 pm
Suppose the current T-bill rates is 5%, the expected return for
stock A is 15%, with a standard
deviation of 15%, the expected return for a real estate asset is
10%, with a standard deviation of 10%.
Correlation between stocks and real estate is 25%.
a. If we borrow $0.5 at the risk-free rate, and invest $1.5 in
stocks. What is the expected return and
risk?
b. What is the expected return and standard deviation if we hold
50% real estate asset and 50%
stocks?
c. If we borrow $1 at the risk-free rate, and invest $2 in the
risky mixed asset portfolio. What is
the expected return and risk?
stock A is 15%, with a standard
deviation of 15%, the expected return for a real estate asset is
10%, with a standard deviation of 10%.
Correlation between stocks and real estate is 25%.
a. If we borrow $0.5 at the risk-free rate, and invest $1.5 in
stocks. What is the expected return and
risk?
b. What is the expected return and standard deviation if we hold
50% real estate asset and 50%
stocks?
c. If we borrow $1 at the risk-free rate, and invest $2 in the
risky mixed asset portfolio. What is
the expected return and risk?