Question

You invest $18,000 in a stock portfolio with an expected return of 14% and a standard...

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?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

о - 60 We a ) Сорт - 8 ooo +12-ооо wЬ - ) — о- бо 2 O• Чо бе - 29 *. , съ= 12:/- , 9 = 0-45 Sportfoli .. - Asewe“ + **ъо, +20

Add a comment
Know the answer?
Add Answer to:
You invest $18,000 in a stock portfolio with an expected return of 14% and a standard...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Suppose you invest your risky portfolio into one stock and one corporate bond. 50% of your...

    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...

    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...

    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...

    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...

    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...

    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

    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 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...

    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...

    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...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT