An investor owns $6,000 of Adobe Systems stock, $3,000 of Dow Chemical, and $7,000 of Office...

An investor owns $6,000 of Adobe Systems stock, $3,000 of Dow Chemical, and $7,000 of Office Depot. What are the portfolio weights of each stock? (Round your answers to 4 decimal places.)

	Portfolio weights
Adobe System
Dow Chemical
Office Depot

Expert Solution

jeff jeffy answered 2 years ago

You have a two stock portfolio with $3,000 in stock A and $7,000 in stock B....

You have a two stock portfolio with $3,000 in stock A and $7,000 in stock B. You believe the following probability distribution exists for your stocks. State of the Economy Probability of State Occurring Market Rate of Return of Stock A Market Rate of Return of Stock B Portfolio Return Boom 0.3 -25% 25% Normal 0.5 10% 15% Recession 0.2 30% 5% 1. Calculate Expected rate of Return, Risk, and CV of Stock A 2. Calculate portfolio expected rate of...

The table lists the monthly total returns on Adobe Systems Inc. common stock and the market...

The table lists the monthly total returns on Adobe Systems Inc. common stock and the market rates of return for a 24-month period. Observation Month Adobe rate of return (%) Market rate of return (%) 1 Aug 2014 3.83 4.18 2 Sep 2014 -3.77 -2.11 3 Oct 2014 1.34 2.74 4 Nov 2014 5.08 2.43 5 Dec 2014 -1.33 -0.01 6 Jan 2015 -3.54 -2.77 7 Feb 2015 12.79 5.78 8 Mar 2015 -6.52 -1.01 9 Apr 2015 2.87 0.42...

The investor decides to diversify by investing $3,000 in Gryphon stock and $5,000 in Royal stock,...

The investor decides to diversify by investing $3,000 in Gryphon stock and $5,000 in Royal stock, which Grypon stock has an expected return of 9.4% and a standard deviation of 5.24%, and which Royal stock has an expected return of 10% and a standard deviation of 13.5%. The correlation coefficient for the two stocks' returns is 0.7. Calculate the expected return and standard deviation of the portfolio. And I calculated that the expected return of the portfolio is 9.78%, and...

Consider an investor who owns stock XYZ. The stock is currently trading at $120. The investor...

Consider an investor who owns stock XYZ. The stock is currently trading at $120. The investor worries that the outlooks for the market and the stock are not favorable. The investor decides to protect his potential losses by using derivatives. Assume the investor decided to purchase a European call option on stock ABC. Further assume that the current price of the stock is $130. The investor paid $10 for the call with the strike price at $155. (A)If the stock...

An investor currently owns a portfolio of stocks and expects that the stock market will be...

An investor currently owns a portfolio of stocks and expects that the stock market will be down next quarter. How does the investor minimize the risk of potential capital loss without selling the portfolio?

A real estate investor owns a small office building she has leased to a major insurance...

A real estate investor owns a small office building she has leased to a major insurance company for a rental fee based on a share of the profits. If the insurance company is successful, the present value of future rentals is estimated at $15 million. If the insurance company is not successful, the present value of the rentals will be $2 million. The insurance company has offered the investor $6 million to buy the property outright. On an expected monetary...

An investor owns 12000 shares of a particular stock. The current market price is 100.what is...

An investor owns 12000 shares of a particular stock. The current market price is 100.what is the "worst case" value of the portfolio in six months. For the purpose of this question, define the worst case value of the portfolio as the value which is such that there is only a 1% chance of the actual value being lower. Assume that the expected. Return and vitality of the stock price are 8.5% and 23% respectively.

An investor owns 5,000 shares of IBM stock, $105 per share. He thinks that there is...

An investor owns 5,000 shares of IBM stock, $105 per share. He thinks that there is no large rise and possible drop in price. This investor decides to sell 50 December 110 call option at $4, receiving $20,000. Note: Each call option contract provides for the right to buy 100 shares of stock. December 110 call option means that the strike price of the call is 110 and it natures in December. If IBM stock price rises from $105 to...

Hedging with a put option Suppose that an investor owns one share of ABC stock currently...

Hedging with a put option Suppose that an investor owns one share of ABC stock currently priced at $30. The investor is worried about the possibility of a drop in share price over the next three months and is contemplating purchasing put options to hedge this risk. The put option is having a strike of $30 and premium of $1.50. Compute the profit of a a. un-hedged position if the stock price in three months is $25 b. *un-hedged position...

An investor owns a three-stock portfolio today with the market value and expected annual return for...

An investor owns a three-stock portfolio today with the market value and expected annual return for each of the stocks as follows blue - 12,000 8% black 22,000 10% Serina 16000 12% What is the expected portfolio value two years from now

Question