market portfolio

Suppose the CAPM holds, RF =4%, and the expected return on the market portfolio is 6%. Assumecontinuous compounding. A company will sell 1 unit of gold a year from today. Assume the mean priceof gold GT to be $100 in a year, and the standard deviation of the gold price GT to be $20. Assumethat the gold β = .9.(a) Find the value of the firm if it did no hedging.(b) If the firm went short $ β times the value of the firm in (a) of the market portfolio, and investedthe proceeds in riskless debt, then what would be the hedged firm’s beta? What would be itsexpected return, and what would be the market value of the firm?(c) Find the forward price of a 1-year forward contract on a unit of gold. Find the value of the firmif it hedged its gold price risk in the forward market.

Don't use plagiarized sources. Get Your Custom Essay on
market portfolio
Just from $13/Page
Order Essay
Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.
error: Content is protected !!
Live Chat+1(978) 822-0999EmailWhatsApp

Order your essay today and save 20% with the discount code GOODESSAY

paket wisata banyuwangi minyak lintah nusa penida tour bromo ijen tour loker situbondo slot gacor slot5000 slot bonus 100 togel taiwan slot online bandar togel charcoal briquettes istanaimpian rajabandot kingdomtoto Key4d lotus4d olxtoto