Homework Answers
a. Expected Return of Portfolio =10%*0.17+90%*0.11 =11.60%
Standard Deviation of Portfolio
=((10%*0.12)^2+((90%*0.05)^2+2*10%*90%*0.12*0.05*0.30)^0.5
=4.99%
b. Expected Return of Portfolio =90%*0.17+10%*0.11 =16.40%
Standard Deviation of Portfolio
=((90%*0.12)^2+((10%*0.05)^2+2*90%*10%*0.12*0.05*0.30)^0.5
=10.96%
c. Expected Return of Portfolio =10%*0.17+90%*0.11 =11.60%
Standard Deviation of Portfolio
=((10%*0.12)^2+((90%*0.05)^2-2*10%*90%*0.12*0.05*0.30)^0.5
=4.30%
d. Expected Return of Portfolio =90%*0.17+10%*0.11 =16.40%
Standard Deviation of Portfolio
=((90%*0.12)^2+((10%*0.05)^2-2*90%*10%*0.12*0.05*0.30)^0.5
=10.66%
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Expected Returns 0.17 0.11 0.30 Standard Deviation 0.12 0.05 Firm A's common stock Firm B's common...
(Computing the standard deviation for a portfolio of two nisky investments, Mary Guilt recently graduated from...
(Computing the standard deviation for a portfolio of two nisky investments, Mary Guilt recently graduated from Nichols State University and is acous to begin investing her mengering a way of applying what she has leamed in business School Specifically, shevang e ment in a portfolio comprised of two ms' common stock. She has collected the following information about the common stock of F A and F H a. If Mary invests all her money in each of the two common...
(Computing the standard deviation for a portfolio of two risky investments Mary Gulo recently graded from...
(Computing the standard deviation for a portfolio of two risky investments Mary Gulo recently graded from Nichols State Unversity and is a s to begin investing her meget vigs as a way of ww what she has learned in business School Specifically, she is evaluating an investment in a pontono comprised of two firms common stock. She has collected the flowing information about the common stock of Fm Aandom BBW and standard deviation in portfolio a Mary invests at the...
a. If Mary invests half her money in each of the two commonstocks, what is the portfolio's expected rate of return and...
a. If Mary invests half her money in each of the two
commonstocks, what is the portfolio's expected rate of return and
standard deviation in portfolio return?
b. Answer part a where the correlation between the two common
stock investments is equal to zero.
c. Answer part a where the correlation between the two common
stock investments is equal to plus+1.
d. Answer part a where the correlation between the two common
stock investments is equal to minus−1.
e. Using...
a. If Mary invests half her money in each of the two common stocks, what is...
a. If Mary invests half her money in each of the two common
stocks, what is the portfolio's expected rate of return and
standard deviation in portfolio return?
b. Answer part a where the correlation between the two common
stock investments is equal to zero.
c. Answer part a where the correlation between the two common
stock investments is equal to +1
d. Answer part a where the correlation between the two common
stock investments is equal to -1
e....
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2. Company A's stock has a beta of BA 1.5, and Company B's stock has a beta of βΒ-2.5. Expected r...
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(Computing the standard deviation for a portfolio of two nisky investments, Mary Guilt recently graduated from Nichols State University and is acous to begin investing her mengering a way of applying what she has leamed in business School Specifically, shevang e ment in a portfolio comprised of two ms' common stock. She has collected the following information about the common stock of F A and F H a. If Mary invests all her money in each of the two common...
(Computing the standard deviation for a portfolio of two risky investments Mary Gulo recently graded from Nichols State Unversity and is a s to begin investing her meget vigs as a way of ww what she has learned in business School Specifically, she is evaluating an investment in a pontono comprised of two firms common stock. She has collected the flowing information about the common stock of Fm Aandom BBW and standard deviation in portfolio a Mary invests at the...
a. If Mary invests half her money in each of the two
commonstocks, what is the portfolio's expected rate of return and
standard deviation in portfolio return?
b. Answer part a where the correlation between the two common
stock investments is equal to zero.
c. Answer part a where the correlation between the two common
stock investments is equal to plus+1.
d. Answer part a where the correlation between the two common
stock investments is equal to minus−1.
e. Using...
a. If Mary invests half her money in each of the two common
stocks, what is the portfolio's expected rate of return and
standard deviation in portfolio return?
b. Answer part a where the correlation between the two common
stock investments is equal to zero.
c. Answer part a where the correlation between the two common
stock investments is equal to +1
d. Answer part a where the correlation between the two common
stock investments is equal to -1
e....
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...
2. Company A's stock has a beta of BA 1.5, and Company B's stock has a beta of βΒ-2.5. Expected returns on this two stocks are E [rA]-9.5 and E rB 14.5. Assume CAPM holds. At age 30, you decide to allocate ALL your financial wealth of $100k between stock A and stock B, with portfolio weights wA + wB1. You would like this portfolio to be risky such that Bp- 3 (a) Solve for wA and wB- (b) State...
Year 2014 2015 Stock A's Returns, ra (19.70%) 23.00 13.75 (2.25) 25.25 Stock B's Returns, le (14.80%) 17.40 36.20 (7.60) 8.85 2016 2017 2018 a. Calculate the average rate of return for each stock during the period 2014 through 2018. Round your answers to two decimal places. Stock A: % ol Stock B: b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the...
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