Question

In: Finance

The Canadian Musician/Artist Aubrey Drake Graham, known by his stage name “Drake “ has invested 70%...

The Canadian Musician/Artist Aubrey Drake Graham, known by his stage name “Drake “ has invested 70% of his money in share A and the remainder in share B. He assesses their prospects as follows:

A

B

  Expected return (%)

15

22

  Standard deviation (%)

20

24

     Correlation between returns

.4
  1. What are the expected return and standard deviation of returns on this two share portfolio? (Do not round intermediate calculations. Round your answers to 2 decimal places.
  2. How would your answer change if the correlation coefficient were 1, 0 or –.4? (Round your answers to 2 decimal places.)? What happens to the return and risk, as we change correlation coefficients?

Provide details use timeline thanks!

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Claude Monet was an artist who was known for his impressionist paintings. Later in life, the...
Claude Monet was an artist who was known for his impressionist paintings. Later in life, the choices of colors in his paintings changed. These color choices were the result of a visual disorder. What is the visual disorder and why did it affect his choice of colors?
A prolific artist, Pablo Picasso (1881-1973) painted 1,000 paintings during what is known as his “Blue...
A prolific artist, Pablo Picasso (1881-1973) painted 1,000 paintings during what is known as his “Blue Period”, and all thousand paintings are on display and hanging in galleries throughout the world. a) Draw the supply curve for Picasso’s Blue period works. Why is this supply curve different from other ones you have seen that follow the Law of Supply? b) Given your answer to a), the price of a Blue Period painting will be entirely dependent on what factors? Draw...
John has his portfolio invested in a diversified mutual fund portfolio. Recently, his portfolio (which is...
John has his portfolio invested in a diversified mutual fund portfolio. Recently, his portfolio (which is up 9% per year annually for the past 10 years), has dropped almost 15%. What type of risk is John’s portfolio exposed to? Idiosyncratic Risk Behavioral Risk Systematic Risk Industry Risk Lenny, after studying the income statement & cash flow statement of four technology companies, decides that his best option for the long term is T Mobile stock. What type of analysis did Lenny...
Tom is your client. He has 64% of his portfolio invested in the market and the...
Tom is your client. He has 64% of his portfolio invested in the market and the rest is invested in T-bills (risk-free). T-bills offer a rate of 1.8%, while the expected return on the market is 8.2% and the volatility of the market is 15.7%. What is the expected return of Tom’s portfolio? {Give your answer as a percentage with 2 decimals, e.g., if the result of your calculations is 0.0345224 (or 3.45224%) , enter 3.45 as your answer.}
Heathcliff has invested 40% of his wealth in stock A and the remainder in stock B....
Heathcliff has invested 40% of his wealth in stock A and the remainder in stock B. He has assessed their prospects as follows; A (15% expected return & 20% Standard deviation) B (20% expected return & 22% Standard deviation) The correlation coefficient for these two stocks is ?AB= 0.50. 1. Calculate the expected return (ER) and risk (?) of his portfolio. 2. Is his portfolio better or worse than investing entirely in stock A? Why? 3. If the correlation coefficient...
Ebenezer Scrooge has invested 65% of his money in share A and the remainder in share...
Ebenezer Scrooge has invested 65% of his money in share A and the remainder in share B. He assesses their prospects as follows: A B Expected return (%) 15 19 Standard deviation (%) 21 21 Correlation between returns 0.5 a. What are the expected return and standard deviation of returns on his portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. How would your answer change if the correlation coefficient were...
Ebenezer Scrooge has invested 50% of his money in share A and the remainder in share...
Ebenezer Scrooge has invested 50% of his money in share A and the remainder in share B. He assesses their prospects as follows: A B Expected return (%) 16 18 Standard deviation (%) 21 25 Correlation between returns .6 a. What are the expected return and standard deviation of returns on his portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return % Standard deviation % b. How would your answer...
Ebenezer Scrooge has invested 50% of his money in share A and the remainder in share...
Ebenezer Scrooge has invested 50% of his money in share A and the remainder in share B. He assesses their prospects as follows: A B Expected return (%) 18 19 Standard deviation (%) 20 24 Correlation between returns 0.3 a. What are the expected return and standard deviation of returns on his portfolio? b. How would your answer change if the correlation coefficient were 0 or –0.30?
Q7) Lin has $100000.00 invested in the stock market and $50000.00 in his savings account. At...
Q7) Lin has $100000.00 invested in the stock market and $50000.00 in his savings account. At the end of each year, he looks at the total of his investments and transfers money from one to the other so that his stock market investment is again twice as much as his savings account. His savings account always pays 3% compounded quarterly. a) In the first year, his stock market investment earns 4.00% (effective annual rate). How much money does he transfer...
(Round the final answer to 4 decimal digits) 1. A brand name has a 70% recognition...
(Round the final answer to 4 decimal digits) 1. A brand name has a 70% recognition rate. Assume the owner f the brand wants to verify that rate by begging with a small sample of 6 randomly select consumers. a. What is the probability that exactly 4 of the selected consumers recognize the brand name? b. What is the probability that all of the selected consumers recognize the brand name? c. What is the probability that at least 5 of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT