Question

In: Finance

6. You are interested in an International Portfolio made up of US and Canadian securities. The...

6. You are interested in an International Portfolio made up of US and Canadian securities. The return on US is 15% and the return on Canada is 20%. The standard deviation of returns for US is 30% while that of Canada is 20%. If the correlation between US and Canada is -1, obtain the relevant weights for US and Canada to construct an international portfolio with zero risk. Compute the expected return on such a portfolio.

Solutions

Expert Solution

Please give an Up vote if you like the solution.

jeff jeffy answered 4 months ago
Next > < Previous

Related Solutions

Assume a portfolio of assets is made up of two securities, security A and security B....
Assume a portfolio of assets is made up of two securities, security A and security B. An amount of investment of GHS12,000 is made in security A and GHS8000 is made in security B. The return for security A is 30% and the return for security B is 20%. The standard deviation for security A is 15% whilst the standard deviation of security B is 10%. The correlation of return of security A and return of security B is given...
You set up a portfolio made up of five o six funds.Analyse the portfolio you have...
You set up a portfolio made up of five o six funds.Analyse the portfolio you have set up taking into account the risk return criteria and taking into account the macro economic factors of the economy .Explain why you prefer managed funds or exchange traded funds or a mixture of the two.Explain in detail these funds and why you like these funds.You need to match your asset allocation with your risk profile.
An Investor is interested to construct a portfolio of two securities, X and Y. He is...
An Investor is interested to construct a portfolio of two securities, X and Y. He is given the following information: The expected return for X and Y are 11.75% and 20.25% respectively and standard deviation of return (σ) of X is 9.95% and 18.12% respectively and correlation of coefficient (ρ) between X &amp; Y is 0.159. If the investor is constructing five portfolios as follows: all funds are invested in X, 50% each in X and Y, 80% &amp; 20%...
 You are putting together a portfolio made up of four different stocks. ​ However, you are...
 You are putting together a portfolio made up of four different stocks. ​ However, you are considering two possible​ weightings:  Portfolio Weightings Asset Beta First Portfolio Second Portfolio A 2.5 10% 40% B 1 10% 40% C 0.5 40% 10% D -1.5 40% 10% 1.  What is the beta on each​ portfolio? and which portfolio is​ riskier? 2.  If the​ risk-free rate of interest were 4 percent and the market risk premium were 5 percent​, what rate of return would...
 You are putting together a portfolio made up of four different stocks. ​ However, you are...
 You are putting together a portfolio made up of four different stocks. ​ However, you are considering two possible​ weightings: CHART BELOW a.  What is the beta on each​ portfolio? b.  Which portfolio is​ riskier? c.  If the​ risk-free rate of interest were 5 percent and the market risk premium were 7.5 percent​, what rate of return would you expect to earn from each of the​ portfolios? Portfolio Weightings Asset Beta First Portfolio Second Portfolio A 2.40 12​% 38​% B...
Terry's Expansion Fund is made up of available for sale (AfS) securities. The securities were purchased...
Terry's Expansion Fund is made up of available for sale (AfS) securities. The securities were purchased on January 1st of last year (2019). At the end of 2019, the CFO made the correct entry to account for the change in value, but no adjustment has yet been made for changes in value in the current year (2020). The table below contains all of the important information about the securities that are part of the expansion fund. Terry’s upper management has...
6: The key distinguishing feature of the ________________ is that securities of up to a year...
6: The key distinguishing feature of the ________________ is that securities of up to a year in maturity are traded there.      a. money market      b. primary market      c. capital market      d. secondary market 7: Which of the following would not be an indirect transfer?      a. M&I Bank takes in deposits from Bill and Teresa. M&I uses most of the money to make a loan to Josephine.      b. Northwestern Mutual Life Insurance sells a life insurance policy to Sharon. The premium...
You have had a portfolio made up of three assets. For each of these three assets,...
You have had a portfolio made up of three assets. For each of these three assets, pricing data are below: Price at the end of Common stock A Preferred Stock B Coupon Bond C year 0 $28 $100 $1,040 year 1 $30 $100 $1,050 year 2 $35 $102 $1,040 year 3 $41 $103 $1,050 year 4 (now) $44 $105 $1,060 The common stock pays a common dividend of $2 at the end of each year. The preferred stock pays a...
A portfolio manager with $60 million in Canadian securities could reduce interest-rate risk by Select one:...
A portfolio manager with $60 million in Canadian securities could reduce interest-rate risk by Select one: a. selling financial futures. b. going long on financial futures. c. buying financial futures. d. all of these choices
If you want to optimize your portfolio of risky securities, which portfolio is the ideal portfolio?...
If you want to optimize your portfolio of risky securities, which portfolio is the ideal portfolio? a) the portfolio that is tangent to the CAL b) The portfolio that is furthest to the right in the return/standard deviation space c) the minumum variance portfolio d) the portfolio that offers the highest return
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT