Kiwi traders have invested in two securities traded at the Nairobi Stock Exchange (NSE). Supposing A...

Kiwi traders have invested in two securities traded at the Nairobi Stock Exchange (NSE). Supposing A and B’s possible returns are as follows:

X=18%, 16%, 14%, 12%, 10%, 8%, 7%, 5%, 3% and 0% for periods one to ten.

Y=6%,7%,8%,9%,11%,13%,15%,17, %19%,19.5%, for periods one to ten, and each possible return has an equal chance in both cases. Other details remain the same.

Required

If Kiwi trader’s portfolio formation is Ksh 300,000, committing equal amounts in each asset, determine the Portfolio risk? (show working)

Expert Solution

Standard deviation =

Covariance =

Correlation = Covariance / Stand. Dev X * Stand. Dev Y

Portfolio risk = [(Wx*Stand. Dev X)^2 + (Wy * Stand. Dev.Y)^2 + (2*Wx * Wy * Stand. Dev. x * Stand. Dev. y * cor(x,y) ] ^ (1/2)

Given amounts are equally invested so weights = 0.5

Risk = [(0.5*5.891%)^2 + (0.5*4.746)^2 + (2*0.5*0.5*5.891*4.746*0.8057)]^(1/2)

Portfolio Risk = 5.06%

jeff jeffy answered 2 years ago

Kiwi traders have invested in two securities traded at the Nairobi Stock Exchange (NSE). The security...

Kiwi traders have invested in two securities traded at the Nairobi Stock Exchange (NSE). The security A Possible returns are estimated as 4%, 4.5%, 6%, 8%, 11%, 13%, 15%, 16%, 16.5% and 18%, with probabilities: 0.09, 0.07, 0.1, 0.2, 0.04, 0.03, 0.01, 0.02, 0.21 and 0. 23 respectively. Those of Security Y are estimated as 16%, 14%, 12%, 10%, 8%, 6%, 4%, 4%, 3%, and 2%, with probabilities: 0.08, 0.1, 0.07, 0.25, 0.09, 0.12, 0.03, 0.11, 0.1 and 0.05 respectively....

Project to identify opportunities for IS (information system) at NSE (national stock exchange) For example How...

Project to identify opportunities for IS (information system) at NSE (national stock exchange) For example How information system has helped British American Tobacco Kenya Ltd…please write about 200 words. Project to identify opportunities for IS (information system) at NSE (national stock exchange) For example How information system has helped British American Tobacco Kenya Ltd…please write about 200 words.

How can we use Fusion investing on Stock exchange marker, such us ; NSE, Tadawul ....

How can we use Fusion investing on Stock exchange marker, such us ; NSE, Tadawul . ?

8. Rollflex and Morgan Trust are two stocks traded on the New York Stock Exchange. For...

8. Rollflex and Morgan Trust are two stocks traded on the New York Stock Exchange. For the past ten weeks, you recorded the Friday closing price (dollars per share): Rollflex: 21 20 20 23 24 20 25 23 28 21 Morgan Trust: 53 51 50 50 50 55 54 52 50 57 a) Compute the mean, median, mode, standard deviation, and variance for each stock. b) Create a boxplot for each stock. c) Which do you consider a better investment...

The Securities and Exchange Commission (SEC) is mandated to regulate the financial statements of publically traded...

The Securities and Exchange Commission (SEC) is mandated to regulate the financial statements of publically traded reporting corporations. Recently, the SEC has renewed their focus on Non-GAAP reporting issues that are impacting the valuation process of regulated companies. In 2003, the SEC issued Reg G which restricted a company’s ability to deviate from compliance with GAAP regulatory pronouncements. Prior to the issuance of REG G, major reporting issues pertaining to ENRON had resulted in the SEC becoming aware of misleading...

Riverbed Enterprises is a large Canadian company traded on the Toronto Stock Exchange. Riverbed purchased two...

Riverbed Enterprises is a large Canadian company traded on the Toronto Stock Exchange. Riverbed purchased two copyrights during 2020. The first copyright was purchased on February 1 for $21,700 and was expected to have a useful life until the end of December, 2022. The second copyright was purchased on July 1 for $126,000 and was expected to have an indefinite useful life. Riverbed's fiscal year-end was December 31. On July 1, 2021, Riverbed paid $5,040 in legal fees to successfully...

Using the Securities and Exchange Commissions’ website, select a publicly traded company and review their 10K...

Using the Securities and Exchange Commissions’ website, select a publicly traded company and review their 10K report for controls and procedures (Item 9 and Item 9A). Discuss your findings and share your thoughts on what the company has disclosed. EDGAR Company Filing: U.S. Securities and Exchange Commission. Retrieved from http://www.sec.gov/edgar/searchedgar/companysearch.html

Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B)...

Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are described by the Cobb-Douglas Utility function: Us=B1/3SC2/3S U s = B S 1 / 3 C S 2 / 3 Andrew's preferences are given by: UA=B1/2AC1/2A U A = B A 1 / 2 C A 1 / 2 Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA...

Consider a non-dividend paying stock. Recall that we have found the forward price of a stock supposing that

Consider a non-dividend paying stock. Recall that we have found the forward price of a stock supposing that the market is perfect. In particular, we assumed that the borrowing rate equals the saving rate and that there is no bid-ask spread in trading the stock. Suppose now that the effective borrowing rate is not equal the effective saving rate, in particular, rb(t,T) >rs(t,T). Suppose in addition that the bid price (when you sell or sell short a stock) is lower...

Multiplex Inc., a public company whose stock is traded on a national stock exchange, reported the...

Multiplex Inc., a public company whose stock is traded on a national stock exchange, reported the following information on its consolidated financial statements for 20X5: From the consolidated income statement: Sales revenues $ 591,000,000 Rental revenues 49,000,000 Income before income taxes 34,000,000 Income taxes 22,000,000 From the consolidated balance sheet: Total assets $ 571,000,000 Multiplex management determined that it had the following operating segments during 20X5: (1) car rental, (2) aerospace, (3) communications, (4) health and fitness products, and (5)...

Question