You invest $18,000 in a stock portfolio with an expected return of 14% and a standard deviation of 24%. You invest $12,000 in a bond portfolio with an expected return of 6% and a standard deviation of 12%. The correlation between the two funds is 0.45. What is the standard deviation of the resulting portfolio?
You invest $18,000 in a stock portfolio with an expected return of 14% and a standard...
Suppose you invest your risky portfolio into one stock and one corporate bond. 50% of your fund is invested in a stock with an expected return of 14% and a standard deviation of 24%. The rest 50% of your fund is invested in a corporate bond with an expected return of 6% and a standard deviation of 12%. The stock and the bond have a correlation of 0.55. What are the expected return and the standard deviation of the resulting...
You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55 and TB or Rf is 2%. What is the SR of the resulting portfolio?
You manage a risky portfolio with an expected return of 12% and a standard deviation of 24%. Assume that you can invest and borrow at a risk-free rate of 3%, using T-bills. a. Draw the Capital Allocation Line (CAL) for this combination of risky portfolio and risk-free asset. What is the Sharpe ratio of the risky portfolio? b. Your client chooses to invest 50% of their funds into your risky portfolio and 50% risk-free. What is the expected return and...
3. You have a risky portfolio that yields an expected rate of return of 15% with a standard deviation of 25%. Draw the CAL for an expected return/standard deviation diagram if the risk free rate is 5%. a. What is the slope of the CAL? b. If your coefficient of risk aversion is 5, how much should you invest in the risky portfolio? 4. A pension fund manager is considering three mutual funds. The first is a stock fund, the...
please provide a breakdown along with equations. 3. You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of you money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolio have a correlation 0.55. The standard deviation of the resulting portfolio will be A. more than 18% but less...
1. Bonds have an expected return of 7% and an annual standard deviation of 10% and the stock market has an expected return of 12% and an annual standard deviation of 25%. Assume that the correlation between bond returns and stock returns is 0.5. You choose to invest 75% in stock market and 25% in bonds. The expected annual return of your portfolio is ____________% 2. Bonds have an expected return of 7% and an annual standard deviation of 10%...
Assume an investment manager is considering to invest in a portfolio composed of Stock (A) and Stock (B). Stock (A) has an expected return of 10% and a Variance of 100 (Standard Deviation=10), while Stock (B) has an expected return of 20% and a Variance of 900 (Standard deviation=30).1- Calculate the expected return and variance of the portfolio if the proportion invested in Sock (A) is (0, .2, .3,.5. .6,.7,1) .The Correlation Coefficient is .4.2- If the Correlation Coefficient is...
You have a portfolio with a standard deviation of 26% and an expected return of 20%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add? Expected Return 12% 12% Standard Deviation 24% 19% Correlation with Your Portfolio's Returns 0.4 0.6 Stock A Stock B Standard deviation...
You have a three-stock portfolio. Stock A has an expected return of 14 percent and a standard deviation of 35 percent, Stock B has an expected return of 18 percent and a standard deviation of 53 percent, and Stock C has an expected return of 17 percent and a standard deviation of 35 percent. The correlation between Stocks A and B is .07. between Stocks A and C is 20, and between Stocks B and C is 19. Your portfolio...
Problem 13-4 Portfolio Expected Return [LO1] You have $18,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 13 percent and Stock Y with an expected return of 11 percent. If your goal is to create a portfolio with an expected return of 12.18 percent, how much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations. Round your answer to the nearest dollar, e.g., 32.) Amount invested...