Question
In: Finance
Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with duke...
Consider the following expected returns, volatilities, and correlations:
| Stock | Expected Return | Standard Deviation | Correlation with duke energy | Correlation With Microsoft | Correlation With Walmart |
| Duke Energy | 15% | 5% | 1 | -1 | 0 |
| Microsoft | 44% | 24% | -1 | 1 | 0.7 |
| Walmart | 23% | 14% | 0 | 0.7 | 1 |
a. Consider a portfolio consisting of only Duke Energy and Microsoft. What is the percentage of your investment (portfolio weight) that you would place in Duke Energy stock to achieve a risk-free investment? b. What is the expected return of a portfolio that is equally invested in Duke Energy and Microsoft? c. What is the volatility of a portfolio that is equally invested in Duke Energy and Microsoft? d. What is the expected return of a portfolio that consists of a long position of $11,000 in WalMart and a short position of $3,000 in Microsoft? e. What is the volatility of a portfolio that consists of a long position of $11,000 in Wal-Mart and a short position of $3,000 in Microsoft?
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jeff jeffy answered 2 years agoRelated Solutions
Use the table for the question(s) below . Consider the following expected returns, volatilities, and correlations:...
Use the table for the question(s) below . Consider the following
expected returns, volatilities, and correlations: Stock Expected
Return Standard Deviation Correlation with Duke Energy Correlation
with Microsoft Correlation with Wal Mart − Duke Energy 14% 6% 1.0
1.0 − 0.0 Microsoft 44% 24% 1.0 − 1.0 0.7 Wal Mart − 23% 14% 0.0
0.7 1.0 Which of the following combinations of two stocks would
give you the biggest reduction in risk? A. Microsoft and Duke
Energy B. Duke Energy...
Stock A has an expected return of 5%, and a standard deviation of returns of 10%....
Stock A has an expected return of 5%, and a standard deviation
of returns of 10%. Stock B has an expected return of 15% and a
standard deviation of returns of 20%. The correlation between the
two stocks returns in 0.90. The standard deviation of an
equally-weighted portfolio comprised of the two stocks will be:
more than 15%
None of the answers listed here.
15%
less than 15%
Stock ABC has an expected return of 10% and a standard deviation of returns of 5%....
Stock ABC has an expected return of 10% and a standard deviation
of returns of 5%. Stock XYZ has an expected return of 12% and a
standard deviation of returns of 7%. You would like to invest $3000
in stock ABC and $2000 in stock XYZ. The correlation between the
two stocks is .5. The expected market return is 11% and the risk
free rate is 4%. Which of the following is false?
1,The expected return of the portfolio is...
Stock A has an expected return of 12%, a standard deviation of 24% on its returns,...
Stock A has an expected return of 12%, a standard deviation of
24% on its returns, and a beta of 1.2. Stock B has an expected
return of 15%, a standard deviation of 30% on its returns, and a
beta of 1.5. The correlation between the two stocks is 0.8. If we
invested $30,000 in Stock A and $20,000 in Stock B, what is the
beta of our portfolio?
Select one:
a. 1.03
b. 1.25
c. 1.32
d. 1.40
e....
1. Expected Return, Variance and standard Deviation Consider the following information on returns and probabilities: State...
1. Expected Return, Variance and standard Deviation
Consider the following information on returns and
probabilities:
State Probability X Y
Boom. .25 15%. 10%
Normal .60 10%. 9%
Recession .15 5% 10%
What are the expected return and standard deviation for Stock X
and Stock Y?
What are the expected return and standard deviation for a
portfolio with an
investment of $6,000 in asset X and $4,000 in asset Y?
Show work please
Based on the following data; (a) calculate the expected return and the standard deviation of returns...
Based on the following data;
(a) calculate the expected return and the standard deviation of
returns for each stock.
State of the
Economy
Probability Stock A Rate of
Return Stock B Rate of Return
Recession
0.25
6%
-20%
Normal Growth
0.45
7%
13%
Boom
0.3
11%
33%
(b) Calculate the expected return and the standard deviation on
the portfolio, where
the portfolio is formed by investing 65% of the funds in Stock A
and the rest in Stock B
Covariance and Correlation Based on the following information, calculate the expected return and standard deviation of...
Covariance and Correlation Based on the following information,
calculate the expected return and standard deviation of each of the
following stocks. Assume each state of the economy is equally
likely to happen. What are the covariance and correlation between
the returns of the two stocks?
STATE OF ECONOMY
RETURN ON STOCK A
RETURN ON STOCK B
Bear
Normal
Bull
-.032
.124
.193
-.103
-.025
.469
Covariance and Correlation Based on the following information, calculate the expected return and standard deviation of...
Covariance and Correlation Based on the following information,
calculate the expected return and standard deviation of each of the
following stocks. Assume each state of the economy is equally
likely to happen. What are the covariance and correlation between
the returns of the two stocks?
STATE OF ECONOMY
RETURN ON STOCK A
RETURN ON STOCK B
Bear
Normal
Bull
-.032
.124
.193
-.103
-.025
.469
What is the Standard deviation ? Consider two stocks, Stock D, with an expected return of...
What is the Standard deviation ? Consider two stocks, Stock D,
with an expected return of 13 percent and a standard deviation of
31 percent, and Stock I, an international company, with an expected
return of 16 percent and a standard deviation of 42 percent. The
correlation between the two stocks is –0.10. What are the expected
return and standard deviation of the minimum variance portfolio?
(Do not round intermediate calculations. Enter your answer as a
percent rounded to 2...
Stock X has an expected return of 11% and the standard deviation of the expected return...
Stock X has an expected return of 11% and the standard deviation
of the expected return is 12%. Stock Z has an expected return of 9%
and the standard deviation of the expected return is 18%. The
correlation between the returns of the two stocks is +0.2. These
are the only two stocks in a hypothetical world.
A.What is the expected return and the
standard deviation of a portfolio consisting of 90% Stock X and 10%
Stock Z? Will any...
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