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Suppose you plan to create a portfolio with two securities: Rolie and Polie. Rolie has an...
You are considering investing in two securities, X and Y. The following data are available for...
You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.09 0.02 Standard deviation of returns 0.04 0.06 Beta 1.00 0.85 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.45, compute the following: The expected return from the...
You are considering investing in two securities, X and Y. The following data are available for...
You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.03 0.05 Standard deviation of returns 0.02 0.07 Beta 1.40 0.70 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.5, compute the following: The expected return from the...
2. You have decided to dissect you grandparent's investment "portfolio” to determine their expected return on...
2. You have decided to dissect you grandparent's investment "portfolio” to determine their expected return on the portfolio and the risk associated with their investments. You were under the impression that your grandparents had a wide array of securities that they were investing in, however, you find that they have invested all of their retirement money into two securities. The first security (45 percent of the portfolio) has an expected return of 17.1 percent with a retu standard deviation of...
Suppose you're crafting a portfolio of two stocks. You plan to buy $6,000 worth of the...
Suppose you're crafting a portfolio of two stocks. You plan to buy $6,000 worth of the first stock and $14,000 worth of the second stock. The first stock has an expected annual return of 10% and volatility of 40%. The second stock has an expected annual return of 8% and volatility of 30%. The risk-free rate is 1%. The correlation coefficient of the two stocks' returns is 0.1. 1. What is the Sharpe Ratio of the first stock. Round to...
you are considering investing in two securities. Security 1 has a expected return of 12% and...
you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of return of 10%. Security 2 has an expected return of 9%and a standard deviation of returns of 8%. The correlation coefficient of returns for the two securities is 0.3. What would the weights be for each of the two securities in the minimum variance portfolio? W1= W2= Given the weights computed in (a), compute the expected return and standard deviation...
statistics 4. An investor holds a portfolio consisting of two stocks. She puts 25% of her...
statistics
4. An investor holds a portfolio consisting of two stocks. She puts 25% of her money in Stock A and 75% into Stock B. Stock A has an expected return of Ri=8% and a standard deviation of 0,=12%. Stock B has an expected return of Rg=15% with a standard deviation of o,=22%. The portfolio return is P=0.25RA +0.75R, (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of the returns on the portfolio assuming that...
only choose one, which of these investments would you choose? 4. You are given the following...
only choose one, which of these investments would you choose? 4. You are given the following information. Weight (proportion of portfolio) Risk (standaro deviation of return) 3% 9% Return Hotel Hotel X Y 10% 20% 75% 25% Hotel a. Calculate the expected return of the portfolio. b. Calculate the standard deviation of the portfolio with a ρ of +1.0. C. Calculate the standard deviation of the portfolio with a ρ of 0. d. Calculate the standard deviation of the portfolio...
A collection of financial assets and securities is referred to as a portfolio. Most individuals and...
A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of the field of finance. Just like stand-alone assets and securities, portfolios are also exposed to risk. Portfolio risk refers to the possibility that an investment portfolio will not generate the investor's expected rate of return. Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio. Consider the...
Consider the following returns of two stocks in conjunction with the market M Std. dev. of...
Consider the following returns of two stocks in conjunction with the market M Std. dev. of stock1 Std. dev. of stock 2 Std. dev. of market Expected return on the market rM 1096 Corr. of stock 1 with the market piM Corr. of stock 2 with the market p2M 0.7 Risk free rate T1 2096 T2 3096 15% 0.4 . According to the CAPM, what should the expected return of stock 1 and stock 2 be? (Note: Your answer should...
you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of ret...
you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of return of 10%. Security 2 has an expected return of 9%and a standard deviation of returns of 8%. The correlation coefficient of returns for the two securities is 0.3. What would the weights be for each of the two securities in the minimum variance portfolio? W1= W2= Given the weights computed in (a), compute the expected return and standard deviation...
2. You have decided to dissect you grandparent's investment "portfolio” to determine their expected return on the portfolio and the risk associated with their investments. You were under the impression that your grandparents had a wide array of securities that they were investing in, however, you find that they have invested all of their retirement money into two securities. The first security (45 percent of the portfolio) has an expected return of 17.1 percent with a retu standard deviation of...
statistics
4. An investor holds a portfolio consisting of two stocks. She puts 25% of her money in Stock A and 75% into Stock B. Stock A has an expected return of Ri=8% and a standard deviation of 0,=12%. Stock B has an expected return of Rg=15% with a standard deviation of o,=22%. The portfolio return is P=0.25RA +0.75R, (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of the returns on the portfolio assuming that...
only choose one, which of these investments would you choose? 4. You are given the following information. Weight (proportion of portfolio) Risk (standaro deviation of return) 3% 9% Return Hotel Hotel X Y 10% 20% 75% 25% Hotel a. Calculate the expected return of the portfolio. b. Calculate the standard deviation of the portfolio with a ρ of +1.0. C. Calculate the standard deviation of the portfolio with a ρ of 0. d. Calculate the standard deviation of the portfolio...
A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of the field of finance. Just like stand-alone assets and securities, portfolios are also exposed to risk. Portfolio risk refers to the possibility that an investment portfolio will not generate the investor's expected rate of return. Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio. Consider the...
Consider the following returns of two stocks in conjunction with the market M Std. dev. of stock1 Std. dev. of stock 2 Std. dev. of market Expected return on the market rM 1096 Corr. of stock 1 with the market piM Corr. of stock 2 with the market p2M 0.7 Risk free rate T1 2096 T2 3096 15% 0.4 . According to the CAPM, what should the expected return of stock 1 and stock 2 be? (Note: Your answer should...
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