You estimate that a passive portfolio, that is, one invested in a risky portfolio that mimics the S&P500 stock index that represents the stock market, yields an expected rate of return of 13% with a standard deviation of 25%. You manage an active portfolio with expected return 18% and standard deviation 28%. The risk-free rate is 8%.
a. Draw the CML (Capital Market Line) and your funds’ CAL (Capital Allocation Line) on an expected return-standard deviation diagram. Indicate their slopes.
b. Suppose your client ponders whether to switch the 70% that is invested in your fund to the passive portfolio. Explain to your client the disadvantage of the switch.
c.In the context of part b, Show him the maximum fee you could charge (as a percentage of the investment in your fund, deducted at the end of the year) that would leave him at least as well of investing in your fund as in the passive one.)
(Hint: The fee will lower the slope of his CAL by reducing the expected return net of the fee.)

Answers

Answer 1

The capital market line with fee will be 0.3771 and the capital allocation line will be 0.24.

How to calculate the slope?

The slope of the capital market line will be:

= (17% - 7% - f)/27

= (10% - f)/27

f = 0.3771

The slope of the capital allocation line will be:

= (13% - 7%) / 25%

= 0.24

The reward to variability ratio will be:

= (17 -7)/27

= 0.3771

The client's reward to variability ratio will be:

= (13 - 7)/25

= 0.25

This shows that the client will be disadvantaged of the switch since it's lower.

Learn more about capital on:

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Related Questions

Find csc theta if sin theta = 4/5

Answers

Answer:

5/4

Step-by-step explanation:

csc theta is essentially 1/sintheta

so you can say that csc theta is 5/4.

another way to do this is to draw the right triangle and find the values of all the sides. this way you'll be able to find all the trig values of the triangle.

post a comment if you want any further guidance or help.

Which of the following tables represent linear relationships?

Answers

Answer:

Table 2 and 3

Step-by-step explanation:

A linear relationship should show a straight line, showing that it's linear.

*View the attached graphs*

Hope this helps!

pls answer i need to answer it in 10-15 mins plsss

Answers

The sum of two odd numbers is an even number

Answer:

The sum of two even numbers is an even number

Step-by-step explanation:

Hey there!

As you can see in the table, all the even numbers when added up are equal to an even number

This make the statement "The sum of two even numbers is an even number" true

3⁄4 of 2⁄3 =? givin brainliest

Answers

Answer:

1/2

Step-by-step explanation:

3/4 of 2/3 = 3/4 × 2/3 = 6/12 = 1/2

The diagram shows the shape of a schools auditorium stage. What is the area of the stage?
Do number 5

Answers

Answer:

100 square feet (100 ft²)

Step-by-step explanation:

Formula

Area (trapezoid) = 1/2 x sum of parallel sides x heightArea (parallelogram) = base x height

Area of stage

Area (trapezoid) + Area (parallelogram)1/2 x (8 + 12) x 4 + 4 x 152 x 20 + 6040 + 60100 square feet

Area of trapezoid:-

1/2(Sum of parallel sides×Height)1/2(8+12)×42(20)40ft²

Area of parallelogram

BH15(4)60ft²

Total:-

60+40=100ft²

write 156/51 as a mixed number in simplest terms

A) 3 1/17
B) 3 3/51
C) 3 2/51
D) 3 1/27

Answers

Answer:

B option is the answer, hope this helps!!

B is the correct answer

10) Complete the net worth statement by determining the total assets and total liabilities. What is the net worth? A) $178,000 B) $180,338 C) $1,052,662 D) $1,233,000

Answers

Answer:

C) $1,052,662

Step-by-step explanation:

Sorry the answer was late and also this is the right answer because i did the test

if 8 pieces is 180 calories how many calories would one piece be?

Answers

Answer:

22.5

Step-by-step explanation:

8 pieces is 180 calories to find the calorie of one piece :

180/8 to get 22.5

I NEED HELP ASAP, I NEED BOTH QUESTIONS ANSWERED THIS IS WORTH 50 POINTS SO PLS HELP ASAP~~

Answers

that’s a lot of points ok gimme a second i’ll write the answer in the comments when I’m done

5
Type the correct answer in the box. Use numerals instead of words.
New York City has a population of approximately 8.8 million people with a population density of approximately 29,300 people per square mi
What is the approximate area of New York City to the nearest square mile?
The area of New York City is approximately
square miles.

Answers

Answer:

300

Step-by-step explanation:

In which data set is the mean greater than the median?

Answers

According to the skewness of each data-set, the first histogram has a mean greater than the median.

What is the relation between mean, median and skewness?

If the mean is greater than the median, the data is positively(right) skewedIf the mean is less than the median, the data is negatively(left) skewed

In this problem, for the mean greater than the median, we want a right-skewed data, which is given by the first histogram.

More can be learned about a data-set skewness at https://brainly.com/question/1446134

Answer:

B

Step-by-step explanation:

took test

5:8:12 of 1,220,000

organize in least to greatest
1.
2.
3.

Answers

Answer:

244,000390,400585,600

Step-by-step explanation:

The total number of parts is 5+8+12 = 25, so the fractions are ...

  5/25 × 1,220,000 = 244,000

  8/25 × 1,220,000 = 390,400

  12/25 × 1,220,000 = 585,600

Least to greatest, the parts are ...

244,000390,400585,600

What is an externality

Answers

Answer:

Externalities refer to situations when the effect of production or consumption of goods and services imposes costs or benefits on others that are not reflected in the prices charged for the goods and services being provided.

the picture below is an example of what it looks like

WHAT EXTERNALITY IS : externality is a economic cost or sometimes a benefit that is the´´by product´´ of the economic activity. the activity that is allacated outside of the system. the resources are likely to be misallocated when there is a externality.

the fact of existing outside the perceiving subject.

In a new video game, Franky had -16 1/2 points. He was able to earn 3/4 of the points he lost back. How many points did he have?

Answers

Answer:

slightly confused on the wording if he got back 3/4 from 16.5 then he earned back 12.375 points

if -16.5 is the 1/4 he didnt get back then he had 66 points

Step-by-step explanation:

10 men can do the work in 8 days. how many men should be reduced to finish the work in 10 days​

Answers

If Reducing 2 men will bbe enough too finish the work in 10 days

For rate of work use the formualar

rate of work = quantity of work / duration

10 men can do the work at a rate of  =  1 / 8

x men can do same work at a rate of = 1 / 10

x * ( 1 / 8 ) = 10 * ( 1 / 10 )

x = 1 * 8 = 8

therefore 8 men can do the work in 10 days

number of men reduced = 10 men - 8 men = 2 men

Hope it helped

Please help me

10 points

Answers

Answer:

I think that the answer is 56

please answer correctly :)

Answers

that is a supplementary angle.

8x+2+34=180
8x+36=180
8x=144
x=18

Enter the solution (x, y) to the system of equations shown.


y=4x−3
y=−x−13

Answers

Answer:

x=-2

y=-11

Step-by-step explanation:

4x-3=-x-13

5x-3=-13

5x=-10

x=-2

y=4(-2)-3

y=-11

the ratio of the sides of a certain triangle is 2:7:8 if the longest side of the triangle is 40cm how long are the other two sides​

Answers

The length of the other two sides is 10 and 35 respectively.

What is a ratio?

A ratio is a quantitative relation showing the comparison between two or more numbers. It can also be written in the fractional form where the first part is the numerator and the second part is called the denominator.

From the given information:

The sides of the triangle = 2:7:8The total sides of the triangle = 2+7+8 = 17

We are being told that the longest side is the triangle is equal to 40.

i.e.

[tex]\mathbf{\to\dfrac{8}{17}\times x = 40}[/tex]

[tex]\mathbf{x = 40 \div \dfrac{8}{17}}[/tex]

[tex]\mathbf{x = 40 \times \dfrac{17}{8}}[/tex]

x = 85

Now for the other two sides 2 and 7, their length is as follows.

[tex]\mathbf{\dfrac{2}{17}\times 85 = 10}[/tex]

[tex]\mathbf{\dfrac{7}{17}\times 85 = 35}[/tex]

Therefore, we can conclude that the length of the other two sides is 10 and 35 respectively.

Learn more about ratios here:

https://brainly.com/question/2328454

. Assuming that the pool is 10 ft deep, approximately how many cubic heters of water will this pool hold when filled? (3.3 feet 1 meter)​

Answers

Answer:

The answer is true

Step-by-step explanation:

hope this helps

A restaurant has a soup-and-salad lunch with the choices listed in the table below. A soup and a salad are selected at random.

What is the probability that tomato soup and a garden salad are selected?


A 1/6


B 1/5


C 1/3


D 5/6

Answers

Answer:

I think it is B) 1/5, but I am not sure.

Will someone please help <3

Answers

Answer:

area of base is 9pi

circumference of base is 6pi

lateral surface 24

surface area is 42

Step-by-step explanation:

A cable company charges $130 for digital cable and internet service. It charges $160 for digital cable, Internet service, and three premium movie channels. What part of the $160 charge for the second package is due to the three movie channels?

Answers

Answer:

$30

Step-by-step explanation:

Since the $130 has everything except the 3 premium movies, i subtracted 160 with 130 to get $30.

Questione Simplify Cosa + 2Cos(a +240")​

Answers

Step-by-step explanation:

[tex] \cos(a) + 2 \cos(a + 240) [/tex]

[tex] \cos(a) + 2 \cos(a) \cos(240) - \sin(a) \sin(240) [/tex]

[tex] \cos(a) + 2( - \frac{ \cos(a) }{2} + \frac{ \sqrt{3} }{2} \sin(a) )[/tex]

[tex] \cos(a) - \cos(a) + \sqrt{3} \sin(a) [/tex]

[tex] \sqrt{3} \sin(a) [/tex]

If you graph the new identity, and the og identiy, they will be conciding graphs, so they are the same identity.

6x + y=4x+ 11y, write a formula for h(x) in terms of x

Answers

Answer:

[tex]h(x)=\frac{1}{5}x[/tex]

Step-by-step explanation:

To write a formula for a function, such as h(x), you need to solve for y.

[tex]6x+y=4x+11y[/tex]
[tex]-4x[/tex]      [tex]-4x[/tex]
[tex]2x+y=11y[/tex]
    [tex]-y[/tex]       [tex]-y[/tex]
[tex]2x=10y[/tex]
[tex]/10[/tex]   [tex]/10[/tex]
[tex]\frac{2}{10}x=y[/tex]
[tex]y=\frac{1}{5}x[/tex]

y and h(x) mean the same thing, so you can subsitute h(x) for y in order to fit the question.

Therefore, [tex]h(x)=\frac{1}{5}x[/tex]

2) Which situation ONLY describes a purchase made with a credit card?
A) Natalie purchased a new computer with her card. The money came straight out of her checking account
B) Jackie loves using her card to make purchases because it is convenient to use, and she doesn't have to carry cash
David paid for dinner with his card. Each time he uses this card his checking account decreases by the purchase amount
D) Maggie took her mother to the movies and paid for it with her card. This charge appeared on a bill she received two weeks later,

Answers

Answer:

D is the correct answer. This charged appeared on a bill

Can you help me solve this

Answers

Answer:

27 miles

Step-by-step explanation:

27 miles is your answer

help i dont know how to do this and i forgot the study guide

Answers

Answer:

number 1 is a

Step-by-step explanation:

I don’t know the rest tho but good luck

CAN SOMEBODY SOLVE THIS EQUATION

Answers

Answer:

The tank starts with 32300 gallons and is decreasing by -16.15 gallons per minute

Match the verbal expression (term) with its algebraic expression (definition).

Match Term Definition
Some number increased by two A) a ÷ 2
A variable decreased by two B) y2
Product of an unknown value and two C) 2z
Quotient of some number and two D) x − 2
An unknown value squared E) b + 2

Answers

Answer:

some number increased by two: (E) b+2

A variable decreased by two: (D) x-2

Product of an unknown value and two (C) 2z

Quotient: (A) a / 2

An unknown value squared: (B) y2

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