Question

In: Finance

The actual returns of company A for the past three months were 15%, 25%, -5% and...

The actual returns of company A for the past three months were 15%, 25%, -5% and that of company B were 18%, 24% and -1%.. In case of portfolio, there will be equal investment a) Calculate the expected standard deviation of company B b) Find the correlation coefficient between the rates of return c) Find the expected portfolio return if you invest equally in the two companies d) Find the weighted standard deviation of the portfolio e) Find the standard deviation of the portfolio using the correlation coefficient found in (b) f) At what correlation coefficient is the maximum risk reduction obtained from diversification? g) Calculate the expected return of company B using geometric average

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

The following table contains the demand from the last 5 months. Month Actual Demand 1 25...
The following table contains the demand from the last 5 months. Month Actual Demand 1 25 2 30 3 33 4 35 5 38 Calculate the single exponential smoothing forecast for these data using an α of 0.3 and an initial forecast (F1) of 28. Report the forecast for Month 6 in AnswerSheet. Show your work in worksheet “Show your work for Q1.” (2 pts.) Calculate the exponential smoothing with trend forecast for these data using an α of 0.25,...
Question 1 a. Over the past twelve months, Lululemon had monthly returns of -5%, 0%, 0%,...
Question 1 a. Over the past twelve months, Lululemon had monthly returns of -5%, 0%, 0%, -5%, 0%, 0%, 10%, 15%, 10%, 0%, 0%, and 5%. What was the total return over this period? b. Suppose Shake Shack returns 10% this year and -10% next year. What is the total return over this 2-year period? Explain why this is not equal to 0%. What would the return for next year have to equal (assuming this year’s return is still 10%)...
Sequoia Furniture Company’s sales over the past three months,half of which are for cash, were...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were as follows: March April May $440,000 $690,000 $560,000 a. Assume that Sequoia’s collection period is 60 days. What would be its cash receipts in May? What would be its accounts receivable balance at the end of May? b. Now assume that Sequoia’s collection period is 45 days. What would be its cash receipts in May? What would be its accounts receivable balance at the...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were as follows: March April May $402,000 $652,000 $522,000 a. Assume that Sequoia’s collection period is 60 days. What would be its cash receipts in May? What would be its accounts receivable balance at the end of May? b. Now assume that Sequoia’s collection period is 45 days. What would be its cash receipts in May? What would be its accounts receivable balance at the...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were as follows: March $408,000 April $658,000 May $528,000 a. Assume that Sequoia’s collection period is 60 days. What would be its cash receipts in May? What would be its accounts receivable balance at the end of May? - Cash Receipts: ? - Accounts receivable balance:? b. Now assume that Sequoia’s collection period is 45 days. What would be its cash receipts in May? What...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were...
Sequoia Furniture Company’s sales over the past three months, half of which are for cash, were as follows: March April May $438,000 $688,000 $558,000 a. Assume that Sequoia’s collection period is 60 days. What would be its cash receipts in May? What would be its accounts receivable balance at the end of May? b. Now assume that Sequoia’s collection period is 45 days. What would be its cash receipts in May? What would be its accounts receivable balance at the...
Company A and B are both service companies. For the past three years their stock returns...
Company A and B are both service companies. For the past three years their stock returns were: A: -5%, 15%, 20% B: 8%, 8%, 20% If A and B are combined into a portfolio with 50% of the funds invested in each stock, calculate the expected return on the portfolio.
The following monthly returns were observed on a security over 6 consecutive months: 5%, 2%, 6%,...
The following monthly returns were observed on a security over 6 consecutive months: 5%, 2%, 6%, -4%, 0% and 3%. What is the effective annual difference between the 6month geometric return and the 6-month arithmetic return?
Given the following past returns for a stock: 2013                + 15 % 2014                + 18 %...
Given the following past returns for a stock: 2013                + 15 % 2014                + 18 % 2015                + 30 % 2016                - 20 % 2017                + 10 % Together, this stock’s expected return and stand alone risk measure mean: a. there is a roughly 70% chance the actual return will be between - 8.02% and + 29.22% b. there is a roughly 70% chance the actual return will be between + 8.02% and + 29.22% c. there is a roughly...
(a) A stock’s returns for the past 3 years are 10%, -15%, and 35%. What is...
(a) A stock’s returns for the past 3 years are 10%, -15%, and 35%. What is the historical Average return? What is the historical sample standard deviation? (b). What is the Efficient Markets Hypothesis (EMH)? (c). i. Suppose you observed that High-Level managers make superior returns on investments in the company’s stock, would this be a violation of weak-form Market Efficiency? Would it be a violation of strong-form Market Efficiency? If the weak-form of the efficient market Hypothesis is valid,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT