Question
In: Finance
Given the following information: Expected return on Stock A .15 (15%) Standard deviation of return 0.3...
Given the following information:
Expected return on Stock A .15 (15%)
Standard deviation of return 0.3
Expected return on Stock B .18 (18%)
Standard deviation of return 0.4
Correlation coefficient of the returns on Stock A and Stock B 0.75
a. What are the expected returns and standard deviations of the following portfolios?
1. 100 percent of funds invested in Stock A
2. 100 percent of funds invested in Stock B
3. 50 percent of funds invested in each stock?
b. What would be the impact if the correlation coefficient were -0.42 instead of 0.75?
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS,
FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 2 years agoRelated Solutions
Given the following information: Expected return on Stock A .15 (15%) Standard deviation of return 0.3...
Given the following
information:
Expected return on Stock A
.15 (15%)
Standard deviation of return
0.3
Expected return on Stock B
.18 (18%)
Standard deviation of return
0.4
Correlation coefficient of the returns
on Stock A and Stock B
0.75
a. What are the expected returns and
standard deviations of the following
portfolios?
1. 100 percent of funds invested in
Stock A
2. 100 percent of funds invested in Stock B
3. 50 percent of funds invested in each stock?...
Q1. Given the following Information Investment Expected return Standard deviation 1 0.12 0.3 2 0.15 0.5...
Q1. Given the following Information
Investment Expected return Standard deviation
1 0.12 0.3
2 0.15 0.5
3 0.21 0.16
4 0.24 0.21
U=E(r) - (A/2)s2 , where A=4.0
a) Briefly describe the variable of E(r), s and A and how these
variables affect the utility of individual. b) Based on
the utility function above, which investment would you select?
(shows your calculation. c) Redo part (b) if the investor
is risk neutral.
The expected return on stock W is 10% and its standard deviation is 15%. Expected return...
The expected return on stock W is 10% and its standard
deviation is 15%. Expected return on stock V is 16% and its
standard deviation is 24%. The correlation between returns of W and
V is 20%.
calculate expected return and standard deviation of a portfolio
that invests 40% in W and 60% in V.
determine the minimum variance combination of W and V and
determine its expected return and standard deviation.
If the risk-free rate is 4%, determine the...
ased on the following information, the expected return and standard deviation for Stock A are ________percent...
ased on the following information, the expected return and
standard deviation for Stock A are ________percent and
________percent, respectively. The expected return and standard
deviation for Stock B are _______ percent and ______percent,
respectively. (Do not include the percent signs (%). Round
your answers to 2 decimal places. (e.g., 32.16))
Rate of Return if State Occurs
State of
Economy
Probability of
State
of Economy
Stock A
Stock B
Recession
0.1
0.04
-0.2
Normal
0.7
0.09
...
Stock A has an expected return of 15% and a standard deviation of 26%. Stock B...
Stock A has an expected return of 15% and a standard deviation
of 26%. Stock B has an expected return of 15% and a standard
deviation of 12%. The risk-free rate is 4% and the correlation
between Stock A and Stock B is 0.5. Build the optimal risky
portfolio of Stock A and Stock B. What is the standard deviation of
this portfolio? Round answer to 4 decimal places
Stock A has an expected return of 15% and a standard deviation of 26%. Stock B...
Stock A has an expected return of 15% and a standard deviation
of 26%. Stock B has an expected return of 15% and a standard
deviation of 12%. The risk-free rate is 4% and the correlation
between Stock A and Stock B is 0.5. Build the optimal risky
portfolio of Stock A and Stock B. What is the standard deviation of
this portfolio?
The expected return on stock W is 10% and its standard deviation is 15%.
The expected return on stock W is 10%
and its standard deviation is 15%. Expected return on stock V is
16% and its standard deviation is 24%. The correlation between
returns of W and V is 20%.a) calculate
expected return and standard deviation of a portfolio that invests
40% in W and 60% in V.b) determine the
minimum variance combination of W and V and determine its expected
return and standard deviation.c) If the
risk-free rate is 4%, determine the...
Given the following information, calculate the expected return and standard deviation for a portfolio that has...
Given the following information, calculate the expected return
and standard deviation for a portfolio that has 50 percent invested
in Stock A, 20 percent in Stock B, and the balance in Stock C.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places.)
Returns
State of
Economy
Probability of
State of Economy
Stock A
Stock B
Stock C
Boom
.80
15
%
18
%
25
%
Bust
.20
16
0
−16
Expected return:__________%
Standard...
Given the following information, calculate the expected return and standard deviation for a portfolio that has...
Given the following information, calculate the expected return
and standard deviation for a portfolio that has 25 percent invested
in Stock A, 32 percent in Stock B, and the balance in Stock C.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places.
Returns
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.30
10
%
19
%
20
%
Bust
0.70
11
0
−11
Expected return
%...
Stock 1 has a expected return of 12% and a standard deviation of 15%. Stock 2...
Stock 1 has a expected return of 12% and a standard deviation of
15%. Stock 2 has a expected return of 10% and a standard deviation
of 12%. Correlation between the two stocks is 0.3. What is the
investment proportion of stock 1 in the minimum variance
portfolio?
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Cryptography is used heavily in internet communications. True or false? Explain
- Suppose Rialto is the only movie cinema in a small college town, so it is essentially...
- With VMI, members of the supply chain share planning, demand, forecasting, and inventory information.
- Large lots are desirable in supply chain coordination despite increasing holding costs.
- ***Convert the C++ to Python*** #include <iostream> using std::cout; using std::cin; using std::endl; int charClass; char...
- Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a...
- The following costs were incurred for the single product produced during the first year of operations...
ADVERTISEMENT