A correlation coefficient of .068 would indicate that
a 6.8% return would be earned with the investment | ||
the returns are virtually uncorrelated | ||
the risk of the investment portfolio is almost zero | ||
the returns are strongly (almost perfectly) positively correlated |
Homework Answers
A correlation coefficient of .068 would indicate that the returns are virtually uncorrelated.
le three alternatives. c. Use your findings in parts a and b to calculate the coefficient of variatio each of the three...
le three alternatives. c. Use your findings in parts a and b to calculate the coefficient of variatio each of the three alternatives. d. On the basis of your findings, which of the three investment alternatives do recommend? Why? LG 4 P8-15 Correlation, risk, and return Matt Peters wishes to evaluate the risk and return be haviors associated with various combinations of assets V and W under three as- sumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative The...
LG4 5-14 Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors...
LG4 5-14 Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfect positive, uncorrelated, and perfect nega- tive. The expected return and risk values calculated for each of the assets are shown in the following table. Asset Expected return, k Risk (standard deviation), V 5% 8% 13 a. If the returns of assets V and W are perfectly positively correlated...
Assume you wish to evaluate the risk and return behaviors associated with various combinations of assets...
Assume you wish to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfect positive, uncorrelated, and perfect negative. The following average return and risk values were calculated for these assets: Asset Average Return, r Risk (Standard Deviation), s V 7.9% 4.6% W 12.7% 9.7% a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = + 1), describe the range of...
1. Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perf...
1. Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perfectly ________ correlated series move exactly in opposite directions and have a correlation coefficient of ________. A. negatively; -1; positively; +1 B. negatively; +1; positively; -1 C. positively; -1; negatively; +1 D. positively; +1; negatively; -1 2. If two assets having perfectly negatively correlated returns are combined in a portfolio, then some combination of those two assets will ________. A. have more risk than...
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with...
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative. The expected return and risk values calculated for each of the assets are shown in the following table, B a. If the returns of assets V and W are perfectly positively correlated correlation coefficient = +1), describe the range of (1) expected return and (2)...
Assume you wish to evaluate the risk and return behaviors associated with various combinations of two stocks, Alpha Sof...
Assume you wish to evaluate the risk and return behaviors associated with various combinations of two stocks, Alpha Software and Beta Electronics, under three possible degrees of correlation: perfect positive, uncorrelated, and perfect negative. The average return and standard deviation for each stock appears here: Asset Average Return,overbar r Risk (Standard Deviation), s Alpha 5.1% 30.3% Beta 11.2% 50.5% a. If the returns of assets Alpha and Beta are perfectly positively correlated (correlation coefficient equals plus 1),...
p8-15 A-C 333 CHAPTER 8 Risk and Return a. If the returns of assets V and...
p8-15 A-C
333 CHAPTER 8 Risk and Return a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = +1), describe the range of (1) expected return and (2) risk associ- ated with all possible portfolio combinations. b. If the returns of assets V and W are uncorrelated (correlation coefficient = 0), describe the approximate range of (1) expected return and (2) risk associated with all possible portfolio combinations c. If the returns of assets...
P.14 An investor holding a portfolio consisting of two stocks invests 25% of assets in Stock...
P.14 An investor holding a portfolio consisting of two stocks invests 25% of assets in Stock A and 75% into Stock B. The return RA from Stock A has a mean of 4% and a standard deviation of A = 8%. Stock B has an expected return E(RB) = 8% with a standard deviation of ob = 12%. The portfolio return is P = 0.25RA +0.75RB. (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of...
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...
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...
le three alternatives. c. Use your findings in parts a and b to calculate the coefficient of variatio each of the three alternatives. d. On the basis of your findings, which of the three investment alternatives do recommend? Why? LG 4 P8-15 Correlation, risk, and return Matt Peters wishes to evaluate the risk and return be haviors associated with various combinations of assets V and W under three as- sumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative The...
LG4 5-14 Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfect positive, uncorrelated, and perfect nega- tive. The expected return and risk values calculated for each of the assets are shown in the following table. Asset Expected return, k Risk (standard deviation), V 5% 8% 13 a. If the returns of assets V and W are perfectly positively correlated...
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative. The expected return and risk values calculated for each of the assets are shown in the following table, B a. If the returns of assets V and W are perfectly positively correlated correlation coefficient = +1), describe the range of (1) expected return and (2)...
p8-15 A-C
333 CHAPTER 8 Risk and Return a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = +1), describe the range of (1) expected return and (2) risk associ- ated with all possible portfolio combinations. b. If the returns of assets V and W are uncorrelated (correlation coefficient = 0), describe the approximate range of (1) expected return and (2) risk associated with all possible portfolio combinations c. If the returns of assets...
P.14 An investor holding a portfolio consisting of two stocks invests 25% of assets in Stock A and 75% into Stock B. The return RA from Stock A has a mean of 4% and a standard deviation of A = 8%. Stock B has an expected return E(RB) = 8% with a standard deviation of ob = 12%. The portfolio return is P = 0.25RA +0.75RB. (a) Compute the expected return on the portfolio. (b) Compute the 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...
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...
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