Question

In: Finance

The following table summarizes the annual returns you would have made on two companies – Scientific...

  • The following table summarizes the annual returns you would have made on two companies – Scientific Atlanta, a satellite and date equipment manufacturer and AT&T, the telecom giant from 1988 to 1998.

Year

Scientific Atlanta (%)

AT&T (%)

1989

80.95

58.26

1990

-47.37

-33.79

1991

31

29.88

1992

132.44

30.35

1993

32.02

2.94

1994

25.37

-4.29

1995

-28.57

28.86

1996

0.00

-6.36

1997

11.67

48.64

1998

36.19

23.55
  • A) Estimate the average and standard deviation in annual returns in each company.
  • B) Estimate the covariance and correlation in returns between the two companies
  • C) Estimate the variance of a portfolio composed, in equal parts, of the two investments.

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I HAVE PROVIDED ANSWERS BY MANUAL CALCULATION AS WELL AS USING EXCEL FUNCTIONS. THANK YOU

ROUNDING IS DONE TILL 4 DECIMALS AS NOTHING IS MENTIONED

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

The following two-way table of counts summarizes whether respondents smoked or not and whether they have...
The following two-way table of counts summarizes whether respondents smoked or not and whether they have had ever divorced or not for persons who had ever been married. Ever Divorced? Smoke? Yes No Yes 275 213 No 386 556 1. Among those who smoked, what percentage has ever been divorced? [Answer to 2 decimal places. Do not type % symbol in the box.] % 2. Among those who has ever been divorced, what percentage smoked? [Answer to 2 decimal places....
The table below shows annual returns for stocks of companies X and Y. Calculate the arithmetic...
The table below shows annual returns for stocks of companies X and Y. Calculate the arithmetic average returns. In addition, calculate their variances, as well as their standard deviations.    Returns Year X Y 1 11 %     19 %     2 29         40         3 18         -9         4 -19         -23         5 20         48             Requirement 1: (a) The arithmetic average return of company X's stock is: (Click to select)  11.80%  9.56%  13.33%  14.75%  14.40%     (b) The...
You have the following data on (1) the average annual returns of the market for the...
You have the following data on (1) the average annual returns of the market for the past 5 years and (2) similar information on Stocks A and B. Which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1 0.03 0.16 0.05 2 ?0.05 0.20 0.05 3 0.01 0.18 0.05 4 ?0.10 0.25 0.05 5 0.06 0.14 0.05 ? bA > 0; bB = 1. bA > +1; bB =...
Consider stocks of two companies A and B, the table below gives their expected returns and...
Consider stocks of two companies A and B, the table below gives their expected returns and standard deviation Expected return for Stock A 10% Expected return for Stock B 25% Standard deviation for Stock A 12% Standard deviation for Stock B 30% Plot the risk and expected return of portfolio of these two stocks for the following correlation coefficient : -1.0,-0.5,0.0,0.5,1.0
The following table shows the annual returns (in percent) and summary measures for a sample of...
The following table shows the annual returns (in percent) and summary measures for a sample of returns from the Vanguard Energy Fund and the Vanguard Health Care Fund from 2012 through 2016. Year Energy (%) Health Care (%) 2012 44.6 15.41 2013 19.68 10.87 2014 37 10.43 2015 -42.87 -18.45 2016 28.36 20.96 If the risk-free rate is 3%, using mean-variance analysis, which fund performed better, and why? a. The Energy Fund performed better, because its Sharpe Ratio was higher....
You have the following historical annual total returns on Terlingua Oil & Gas Exploration: Year Annual...
You have the following historical annual total returns on Terlingua Oil & Gas Exploration: Year Annual total return (%) 2001 8% 2002 -8% 2003 17% 2004 20% 2005 13% 2006 4% 2007 -4% 2008 5% 2009 -5% 2010 5% Calculate the sample standard deviation of annual return. Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol.
You have the following historical annual total returns on Terlingua Oil & Gas Exploration: Year Annual...
You have the following historical annual total returns on Terlingua Oil & Gas Exploration: Year Annual total return (%) 2001 9% 2002 10% 2003 14% 2004 12% 2005 -1% 2006 4% 2007 -1% 2008 8% 2009 -1% 2010 6% Calculate the sample standard deviation of annual return.
Suppose you had the following propositions of returns from two companies W and Y:
  Suppose you had the following propositions of returns from two companies W and Y: (10Marks) Company Returns (OMR) Comments W 475 Company W proposes to give OMR 475 today Y 550 Company Y proposes to give you OMR 550 but after 2 years You also know that the Interest Rate is by 10%. Question: In which company do you choose to invest your money and why? (Use two formulas (ways) and also use Tables to make sure your answers...
The following table summarizes the results from a two-factor study with 3 levels of Factor A...
The following table summarizes the results from a two-factor study with 3 levels of Factor A and 4 levels of Factor B using a separate sample of 5 participants in each treatment condition. Fill in the missing values. Make sure to show your work. Source SS df MS F Between treatments 650 Factor A 5 0 Factor B AxB interaction 120 Within treatments 2 5 Total
Consider the following table for the total annual returns for a given period of time. Series...
Consider the following table for the total annual returns for a given period of time. Series Average return Standard Deviation Large-company stocks 11.7 % 20.6 % Small-company stocks 16.4 33.0 Long-term corporate bonds 5.6 9.1 Long-term government bonds 6.1 9.4 Intermediate-term government bonds 5.6 5.7 U.S. Treasury bills 3.8 3.1 Inflation 3.1 4.2 What range of returns would you expect to see 68 percent of the time for long-term corporate bonds? (A negative answer should be indicated by a minus...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT