96.9k views
4 votes
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? (2 marks)
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. (2
marks)
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). (2 marks)

User Jakoss
by
8.3k points

1 Answer

6 votes

a.

weights = 13500+7600+14700+5500/4 = 10325

these other ones I can't type them here .if yuu want the other answers you can inbox you email so that I send you scanned answer for the all question

User Marmelador
by
8.6k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories