Has any of this questions been answered in your system. I need it to submit answers tonight.

4) Calculate the expected returns from the following portfolios:

Use the following formula to calculate the portfolio standard deviation

ϭP =√ (wAϭA)2 + (wBϭB)2 +(2 wA wB ϭA ϭB ρ(A,B))

=(((wA*ϭA) ^ 2) + ((wB *ϭB) ^2)+(2 *wA* wB *ϭA *ϭB *ρ(A,B))))^.5

Where wA and wB are the % of assets in Asset A and B respectively

ϭA and ϭB are the respective standard deviations of return and

ρ(A,B)).is the correlation of returns between asset A and B

Portfolio Expected Return Portfolio Std Dev.

% Asset A % Asset B

0% 100%

25% 75%

50% 50%

75% 25%

100% 0%

5) Using Portfolio Expected Returns on the Y axis and Portfolio Standard Deviation in the X axis, draw the efficient frontier for possible portfolio combinations of Asset A and B. (include 100% A and 100% B as two possibilities). Hint: Use the Excel Chart Wizard and select the XY(scatter) plot option)

6) Calculate Beta for Asset A (relative to the Market) and Asset B relative to the Market) (use SLOPE function)

Beta for Asset A =

Beta for Asset B =

7) Assume that for next year the Risk Free Rate is expected to be 2% and that the overall Market will realize a return of 12%. Using the CAPM / SML methodology, calculate the required returns for Asset A and Asset B.

Required Return for Asset A =

Required Return for Asset B =

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