You have $10,000 invested in a portfolio A. If you sell 70% and invest in an asset B whose return has a correlation of -0.5 with the return on portfolio. What is your overall portfolio variance then? Assume that the standard deviation of A is 7%, and that for B is 5%
Portfolio's Variance = (wA * A)2 +
(wB *
B)2 +
[2 * wA * wB *
A *
B *
Correlation(A,B)]
= [0.3 * 0.07]2 + [0.7 * 0.05]2 + [2 * 0.3 * 0.7 * 0.07 * 0.05 * (-0.5)]
= 0.000441 + 0.001225 + (-0.000735) = 0.000931, or 9.31%2
You have $10,000 invested in a portfolio A. If you sell 70% and invest in an...
You have $10,000 invested in a portfolio A. If you sell 70% and invest in an asset B whose return has a correlation of -0.5 with the return on portfolio. What is your overall portfolio variance then? Assume that the standard deviation of A is 7%, and that for B is 5%
You have $10,000 invested in a portfolio A. If you sell 70% and invest in an asset B whose return has a correlation of -0.5 with the return on portfolio. What is your overall portfolio variance then? Assume that the standard deviation of A is 7%, and that for B is 5% _____________________%
You have $10,000 invested in a portfolio A. If you sell 70% and invest in an asset B whose return has a correlation of -0.5 with the return on portfolio. What is your overall portfolio variance then? Assume that the standard deviation of A is 7%, and that for B is 5% _____________________%
You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 21.0% and a standard deviation of 40% and T-Bills (e.g., the risk free asset) with an expected return of 5% and a standard deviation of 0%. How much money will you invest in Stock X if your goal is to create a portfolio with an expected return of 26%?
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $160,000. Consider the summary measures in the following table: Investment Expected Return Standard Deviation Old portfolio House 6% 138 118 198 The correlation coefficient between your portfolio and the house is 0.5. a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers to 2 decimal...
You have $500,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $150,000. Consider the summary measures in the following table Investment Old portfolio House Expected Return 7% 19% Standard Deviation 10% 21% 5 points The correlation coefficient between your portfolio and the house is 0.34 eBook a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and the house? (Do not round intermediate calculations. Round your final answers...
3. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 21.0% and a standard deviation of 40% and T-Bills (e.g., the risk free asset) with an expected return of 5% and a standard deviation of 0%. How much money will you invest in Stock X if your goal is to create a portfolio with an expected return of 26%? The amount of money in dollars) that I will invest in...
You have $410,000 invested in a well-diversified portfolio. You inherit a house that is presently worth $160,000. Consider the summary measures in the following table: Investment Expected Return Standard Deviation Old portfolio House 6% 13% 11% 19% The correlation coefficient between your portfolio and the house is o.5 a. What is the expected return and the standard deviation for your portfolio comprising your old portfolio and round intermediate calculations. Round your final answers to 2 decimal places.) the house? (Do...
You invest $1,200 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 20% and a Treasury bill with a rate of return of 4%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 7%.
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