Send to a Friend

JHUstudent's avatar

Need some help with my Accounting 201 class?

Asked by JHUstudent (692points) March 14th, 2012

Just have a couple questions that I’m stumped by. Any help would be much, much appreciated. With lurve coming your way, of course.

Here are the questions:

The risk-free rate of return is 3.2%. The market risk premium currently stands at 5.5%. The
covariance between the excess returns of Company A vis-a-vis the S&P500 excess returns is 0.082.
The standard deviation of the excess returns of Company A is 0.4721 and the standard deviation of
the excess returns of the market is 0.2214. What is the expected return of Company A?

A) 5.2% B) 12.4% C) 7.0% D) 4.0%

The market portfolio has an expected return of 12% and a standard deviation of 22%. The current
risk-free rate of return is 4%. An investor who has a risk tolerance (portfolio standard deviation) of
8% should put what percent of his/her investable funds in the market portfolio?

A) 63.6% B) 66.7% C) 36.4% D) 33.3%

Given the same market conditions as described in the problem above, an investor with a risk
tolerance (portfolio standard deviation) of 30% can expect what level of annual return on his/her
investments?

A) 12% B) 22% C) 15% D) 30%

Thanks guy. If anyone has any help or solutions that’d be so great. In big need of help.

Using Fluther

or

Using Email

Separate multiple emails with commas.
We’ll only use these emails for this message.