Homework Answers
| Expected return%= | Wt Stock A*Return Stock A+Wt Stock B*Return Stock B+Wt Stock C*Return Stock C |
| Expected return%= | 0.3*0.15+0.3*0.21+0.4*0.17 |
| Expected return%= | 17.6 |
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Three-stock Portfolio The information regarding a portfolio consisting of three stocks is given below. Stock A...
The information regarding a portfolio consisting of two stocks is given below. Stock A E(R). 15%...
The information regarding a portfolio consisting of two stocks is given below. Stock A E(R). 15% 17% Standard Deviation 10% 14% Stock B The correlation coefficient between Stocks A and C is zero. It can be inferred that the standard deviation of a portfolio consisting of these two stocks - Zero. Select one: O a. can not be O b. can be
Consider a portfolio comprised of two stocks A and B: The estimates shown below are given...
Consider a portfolio comprised of two stocks A and B: The estimates shown below are given in percentage format for the expected return, E(R), and standard deviation of returns (SD). Stock Weight E(R) SD A 0.40 16% 45% B 0.60 12% 30% The correlation between stocks A and B is .75. Calculate the portfolio expected return and standard deviation. A. 13.6%, 33.67% B. 13.6%, 12.73% D. none of the above C. 12.1%, 18.62%
A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y....
A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y. The covariance between Stock X and Stock Y is 0.10. The standard deviation of Stock X is 0.50, and the standard deviation of Stock Y is 0.50. Which of the following comes closest to the correlation coefficient between Stock X and Stock Y? O a. 0.40 b. 0.60 c. 0.00 O d. 0.50 o e. 1.00
P.14 An investor holding a portfolio consisting of two stocks invests 25% of assets in Stock...
P.14 An investor holding a portfolio consisting of two stocks invests 25% of assets in Stock A and 75% into Stock B. The return RA from Stock A has a mean of 4% and a standard deviation of A = 8%. Stock B has an expected return E(RB) = 8% with a standard deviation of ob = 12%. The portfolio return is P = 0.25RA +0.75RB. (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of...
Two-stock Portfolio Stock A has an expected return of 12.50 percent and a standard deviation of...
Two-stock Portfolio Stock A has an expected return of 12.50 percent and a standard deviation of 25.50 percent. Stock B has an expected return of 7.25 percent and a standard deviation of 30.45 percent. The correlation coefficient between Stock A and B is 0.23. The optimal weight of Stock A in a portfolio consisting of these two stocks is estimated to be _ , and the standard deviation of this portfolio is estimated to be Select one: O a. 61.35%;...
Create a portfolio using the four stocks and information below: Stock A Stock B Stock C...
Create a portfolio using the four stocks and information below: Stock A Stock B Stock C Stock D Expected Return 31.00% 13.00% 32.00% 11.00% Standard Deviation 35.00% 31.00% 11.00% 29.00% Weight in Portfolio 11 .00% 28.00% 10.00% 51.00% Correlation (A,B) Correlation (A,C) Correlation (A,D) Correlation (B,C) Correlation (B,D) Correlation (C,D) 0.0100 0.0700 0.9400 0.2500 0.1900 0.8600
Question 3 (total of 20 marks): An investor holds a portfolio comprising three assets (or stocks)...
Question 3 (total of 20 marks): An investor holds a portfolio comprising three assets (or stocks) A, B and C. Refer to the below tables to answer the questions that follow. Assume that returns are effective annual rates: Variables Stock A Stock B Stock C 33% 40% 25% Stock return standard deviation 0.25 $ 55,000.00 0.33 35,000.00 0.22 10,000.00 Investment $ $ Assume the following information holds: Correlation coefficient of the returns between A & B 0.10 Correlation coefficient of...
You have a three-stock portfolio. Stock A has an expected return of 13 percent and a...
You have a three-stock portfolio. Stock A has an expected return of 13 percent and a standard deviation of 38 percent, Stock B has an expected return of 17 percent and a standard deviation of 43 percent, and Stock C has an expected return of 17 percent and a standard deviation of 43 percent. The correlation between Stocks A and B is 0.30, between Stocks A and C is 0.20, and between Stocks B and C is 0.05. Your portfolio...
Consider the following case: Rajiv is an amateur investor who holds a small portfolio consisting of...
Consider the following case: Rajiv is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table: Stock Percentage of Portfolio Expected Return Standard Deviation Artemis Inc. 20% 6.00% 23.00% Babish & Co. 30% 14.00% 27.00% Cornell Industries 35% 12.00% 30.00% Danforth Motors 15% 5.00% 32.00% The expected return on Rajiv’s stock portfolio is a) 10.35% b) 7.7625% c) 15.52% d) 13.9725% Suppose each stock in...
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation...
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 35%, while stock B has a standard deviation of return of 15%. The correlation coefficient between the returns on A and B is .45. Stock A comprises 10% of the portfolio, while stock B comprises 90% of the portfolio. The standard deviation of the return on this portfolio is closest to: A. 13.9% B. 7.4% C. 19.2% D. 15.4%
The information regarding a portfolio consisting of two stocks is given below. Stock A E(R). 15% 17% Standard Deviation 10% 14% Stock B The correlation coefficient between Stocks A and C is zero. It can be inferred that the standard deviation of a portfolio consisting of these two stocks - Zero. Select one: O a. can not be O b. can be
A portfolio is comprised of equal weights of two stocks labeled Stock X and Stock Y. The covariance between Stock X and Stock Y is 0.10. The standard deviation of Stock X is 0.50, and the standard deviation of Stock Y is 0.50. Which of the following comes closest to the correlation coefficient between Stock X and Stock Y? O a. 0.40 b. 0.60 c. 0.00 O d. 0.50 o e. 1.00
P.14 An investor holding a portfolio consisting of two stocks invests 25% of assets in Stock A and 75% into Stock B. The return RA from Stock A has a mean of 4% and a standard deviation of A = 8%. Stock B has an expected return E(RB) = 8% with a standard deviation of ob = 12%. The portfolio return is P = 0.25RA +0.75RB. (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of...
Two-stock Portfolio Stock A has an expected return of 12.50 percent and a standard deviation of 25.50 percent. Stock B has an expected return of 7.25 percent and a standard deviation of 30.45 percent. The correlation coefficient between Stock A and B is 0.23. The optimal weight of Stock A in a portfolio consisting of these two stocks is estimated to be _ , and the standard deviation of this portfolio is estimated to be Select one: O a. 61.35%;...
Create a portfolio using the four stocks and information below: Stock A Stock B Stock C Stock D Expected Return 31.00% 13.00% 32.00% 11.00% Standard Deviation 35.00% 31.00% 11.00% 29.00% Weight in Portfolio 11 .00% 28.00% 10.00% 51.00% Correlation (A,B) Correlation (A,C) Correlation (A,D) Correlation (B,C) Correlation (B,D) Correlation (C,D) 0.0100 0.0700 0.9400 0.2500 0.1900 0.8600
Question 3 (total of 20 marks): An investor holds a portfolio comprising three assets (or stocks) A, B and C. Refer to the below tables to answer the questions that follow. Assume that returns are effective annual rates: Variables Stock A Stock B Stock C 33% 40% 25% Stock return standard deviation 0.25 $ 55,000.00 0.33 35,000.00 0.22 10,000.00 Investment $ $ Assume the following information holds: Correlation coefficient of the returns between A & B 0.10 Correlation coefficient of...
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