The average return on stock A is 11% per year, while the average return on stock...
The average return on stock A is 11% per year, while the average return on stock B is 15.5% per year. The standard deviation of returns on stock A is 3%, while the standard deviation of returns on stock B is 4.5%. The covariance between A's returns and B's returns is 0.00135. Will there be a diversification effect from combining stocks A and B in a portfolio? How do you know?
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The average return on stock A is 11% per year, while the average
return on stock...
Expected Returns 0.17 0.11 0.30 Standard Deviation 0.12 0.05 Firm A's common stock Firm B's common...
Expected Returns 0.17 0.11 0.30 Standard Deviation 0.12 0.05 Firm A's common stock Firm B's common stock Correlation coefficient (Computing the standard deviation for a portfolio of two risky investments) Mary Guilott recently graduated from college and is evaluating an investment in two companies' common stock. She has collected the following information abou the common stock of Firm A and Firm B: a. If Mary decides to invest 10 percent of her money in Firm A's common stock and 90...
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 5% while stock B has a sta...
A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 5% while stock B has a standard deviation of return of 15%. The correlation coefficient between the returns on A and B is .5. Stock A comprises 40% of the portfolio while stock B comprises 60% of the portfolio. The variance of return on the portfolio is __________.
20. Problem 8.20 (Realized Rates of Return) eBook Stocks A and B have the following historical returns: Year Stock A's...
20. Problem 8.20 (Realized Rates of Return) eBook Stocks A and B have the following historical returns: Year Stock A's Returns, A Stock B's Returns, rB 2013 - 23.30% - 15.50% 2014 20.10 20.00 10.00 2015 31.60 - 12.80 2016 - 2.50 2017 27.25 8.05 a. Calculate the average rate of return for stock A during the period 2013 through 2017. Round your answer to two decimal places. Calculate the average rate of return for stock B during the period...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk and Rates of Return:...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk
and Rates of Return: Risk in Portfolio Context The capital asset
pricing model (CAPM) explains how risk should be considered when
stocks and other assets are held . The CAPM states that any stock's
required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
please answer and show work, I would grately appreciate it 6. The covariance of the market's...
please answer and show work, I would grately appreciate
it
6. The covariance of the market's returns with a the stock's return is 0.008. The standard deviation of the market's returns is 0.08 and the standard deviation of the stock's returns is 0.11. What is the correlation coefficient of the returns of the stock and the returns of the market? 7. A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of...
Using the data in the following table, calculate: A. Average return and standard deviation for each...
Using the data in the following table, calculate: A. Average return and standard deviation for each stock B. Covariance between the stocks C. Correlation between the stocks D. Compute average return and standard deviation of the portfolio that maintains a 50% weight in Stock A and 50% in stock B Year 2010 2011 2012 2013 2014 2015 Stock A -10.0% 20.0% 5.0% -5.0% 2.0% 9.0% Stock B 21.0% 7.0% 30.0% -3.0% -8.0% 25.0%
Stock A’s expected return and standard deviation are E[rA] = 8% and σA= 15%, while stock...
Stock A’s expected return and standard deviation are E[rA] = 8% and σA= 15%, while stock B’s expected return and standard deviation are E[rB] = 12% and σB= 21%.  a. Determine the expected return and standard deviation of the return on a portfolio with weights wA=.35 and wB=.65 for the following alternative values of correlation between A and B: pAB=0.6 and pAB= -0.4. b. Assume now that pAB=-1.0 and find the portfolio p of stocks A and B that...
Stocks A and B have the following historical returns: Year Stock A's Returns, A Stock B's...
Stocks A and B have the following historical returns: Year Stock A's Returns, A Stock B's Returns, re 2011 - 23.40% 15.7094 2012 31.50 29.30 2013 17.75 28.40 2014 - 1.50 - 12.80 2015 29.00 24.15 .. Calculate the average rate of return for stock A during the period 2011 through 2015. Round your answer to two decimal places. Calculate the average rate of return for stock B during the period 2011 through 2015. Round your answer to two decimal...
Standard Deviation Correlation with Stock Average Return of Returns Stock A 6% 5.52% 0.75 9% 10.75%...
Standard Deviation Correlation with Stock Average Return of Returns Stock A 6% 5.52% 0.75 9% 10.75% 0.3 8% 12% -0.4 Suppose you are a risk-averse investor currently holding Stock A. Which of the following stocks would offer the greatest diversification benefits when combined with Stock A in a portfolio? Stock X Stock Y Stock z cannot be determined without beta
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns...
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns for a single stock A IS A = 25%, and the standard deviation of the market return is on = 15%. If the correlation between stock A and the market is PAM - 0.6, then the stock's beta is prns against the market returns will equal the true value of Is it reasonable to expect that the beta value estimated via the regression of...
Expected Returns 0.17 0.11 0.30 Standard Deviation 0.12 0.05 Firm A's common stock Firm B's common stock Correlation coefficient (Computing the standard deviation for a portfolio of two risky investments) Mary Guilott recently graduated from college and is evaluating an investment in two companies' common stock. She has collected the following information abou the common stock of Firm A and Firm B: a. If Mary decides to invest 10 percent of her money in Firm A's common stock and 90...
20. Problem 8.20 (Realized Rates of Return) eBook Stocks A and B have the following historical returns: Year Stock A's Returns, A Stock B's Returns, rB 2013 - 23.30% - 15.50% 2014 20.10 20.00 10.00 2015 31.60 - 12.80 2016 - 2.50 2017 27.25 8.05 a. Calculate the average rate of return for stock A during the period 2013 through 2017. Round your answer to two decimal places. Calculate the average rate of return for stock B during the period...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk
and Rates of Return: Risk in Portfolio Context The capital asset
pricing model (CAPM) explains how risk should be considered when
stocks and other assets are held . The CAPM states that any stock's
required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
please answer and show work, I would grately appreciate
it
6. The covariance of the market's returns with a the stock's return is 0.008. The standard deviation of the market's returns is 0.08 and the standard deviation of the stock's returns is 0.11. What is the correlation coefficient of the returns of the stock and the returns of the market? 7. A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of...
Stocks A and B have the following historical returns: Year Stock A's Returns, A Stock B's Returns, re 2011 - 23.40% 15.7094 2012 31.50 29.30 2013 17.75 28.40 2014 - 1.50 - 12.80 2015 29.00 24.15 .. Calculate the average rate of return for stock A during the period 2011 through 2015. Round your answer to two decimal places. Calculate the average rate of return for stock B during the period 2011 through 2015. Round your answer to two decimal...
Standard Deviation Correlation with Stock Average Return of Returns Stock A 6% 5.52% 0.75 9% 10.75% 0.3 8% 12% -0.4 Suppose you are a risk-averse investor currently holding Stock A. Which of the following stocks would offer the greatest diversification benefits when combined with Stock A in a portfolio? Stock X Stock Y Stock z cannot be determined without beta
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns for a single stock A IS A = 25%, and the standard deviation of the market return is on = 15%. If the correlation between stock A and the market is PAM - 0.6, then the stock's beta is prns against the market returns will equal the true value of Is it reasonable to expect that the beta value estimated via the regression of...
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