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Exercise 1 You hold a stock A that provides you with the following returns:...
You place $75,000 in Stock A and $25,000 in Stock B and hold the portfolio for...
You place $75,000 in Stock A and $25,000 in Stock B and hold the portfolio for one year. Stock A's return is 12% and Stock B's return is 8%. What is the expected return on your portfolio? Consider the following information about three stocks (A, B, and C): all have the same return variance; correlation (A,B) = .65; correlation (A,C) = -.10; correlation (B,C) = 0. Which of the following portfolios will have the lowest return variance: half in A...
Please show work and all steps! The realized returns for stock A and stock B from...
Please show work and all steps!
The realized returns for stock A and stock B from 2004-2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A -8% 22% 7% -3% 4% 11% Stock B 20% 6% 29% -4% -9% 24% Suppose you create a portfolio that is 60% invested in stock A and 40% invested in stock B. The correlation between the returns of the two stocks is 6.27% (a) Calculate the expected return...
The realized returns for stock A and stock B from 2004-2009 are provided in the table...
The realized returns for stock A and stock B from 2004-2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A -9% 21% 6% -4% 3% 10% Stock B 23% 9% 32% -1% -6% 27% (a) Calculate the expected returns (as percents) over the next year for the stocks assuming the average annual realized returns and past volatility from 2004-2009 are unbiased estimators of expected returns and future volatility. stock A 4.5 stock B 14...
1.3 (5 points) Two stocks have the following expected returns and standard deviations Stock Stock Expected...
1.3 (5 points) Two stocks have the following expected returns and standard deviations Stock Stock Expected return Standard Deviation A 10% 12% B 15% 20% Consider a portfolio of A and B, and let w, and wg denote the portfolio weights of these two assets, with W + W, =1. Suppose that the correlation between the expected returns on A and B is equal to 0.3. Use these data to construct the portfolio of A and B with the lowest...
11. suppose the expected returns and standard deviations of Stock A and B are E(R) -...
11. suppose the expected returns and standard deviations of Stock A and B are E(R) - 0.10, E(R) -0.14, -0.36, 0 = 0.61 Calculate the expected return and standard deviation of a portfolio that is composed of 40 percent A and 60 percent B when correlation between the returns on A and B is 0.5 b. Calculate the standard deviation of a portfolio that is composed of 40 percent A and 60 percent B when the correlation coefficient between the...
The following table provides the expected return and the standard deviation of returns for srocks and...
The following table provides the expected return and the
standard deviation of returns for srocks and gold. Your client is
currently holding a portfolio of stocks and he is considering
whether he should replace half of the stocks with gold.
.
Question 1 Part a) The following table provides the expected return and the standard deviation of returns for stocks and gold. Your client is currently holding a portfolio of stocks and he is considering whether he should replace haif...
1. Compute the expected return for a company that will be traded at $100, $120, and $140 next per...
1. Compute the expected return for a company that will be traded at $100, $120, and $140 next period with probabilities 20%, 40%, and 40%, respectively. The price of that company today is $110. 2. Compute the correlation between assets A and B if you know that the standard deviation of B is 50% of the standard deviation of A and the covariance between the two assets is 0.5 times the variance of asset A. 3. What is the risk...
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...
letter b please You have estimated the following probability distribution of returns for two stocks: Stock...
letter b please
You have estimated the following probability distribution of returns for two stocks: Stock N Stock O Probability 0.20 0.30 Return 8% Probability 0.20 0.30 0.30 Return 26% 12 0.30 0.20 -4 0.20 -4 Calculate the expected rate of return and standard deviation for cach stock If the correlation between the returns on the two stocks is -0.40, calculate the portfolio returm and the standard deviation for portfolios containing 100%, 75 % , 50 % , 25 %...
You wish to invest in a portfolio of stocks A (50%) and B (50%). The risk...
You wish to invest in a portfolio of stocks A (50%) and B (50%). The risk free rate is 4%. AB Expected Return (%) 10 20 Beta 1.3 1.6 Correlation coefficient between returns = 0.3 What's the portfolio beta? Do not round.
Please show work and all steps!
The realized returns for stock A and stock B from 2004-2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A -8% 22% 7% -3% 4% 11% Stock B 20% 6% 29% -4% -9% 24% Suppose you create a portfolio that is 60% invested in stock A and 40% invested in stock B. The correlation between the returns of the two stocks is 6.27% (a) Calculate the expected return...
The realized returns for stock A and stock B from 2004-2009 are provided in the table below Year 2004 2005 2006 2007 2008 2009 Stock A -9% 21% 6% -4% 3% 10% Stock B 23% 9% 32% -1% -6% 27% (a) Calculate the expected returns (as percents) over the next year for the stocks assuming the average annual realized returns and past volatility from 2004-2009 are unbiased estimators of expected returns and future volatility. stock A 4.5 stock B 14...
1.3 (5 points) Two stocks have the following expected returns and standard deviations Stock Stock Expected return Standard Deviation A 10% 12% B 15% 20% Consider a portfolio of A and B, and let w, and wg denote the portfolio weights of these two assets, with W + W, =1. Suppose that the correlation between the expected returns on A and B is equal to 0.3. Use these data to construct the portfolio of A and B with the lowest...
11. suppose the expected returns and standard deviations of Stock A and B are E(R) - 0.10, E(R) -0.14, -0.36, 0 = 0.61 Calculate the expected return and standard deviation of a portfolio that is composed of 40 percent A and 60 percent B when correlation between the returns on A and B is 0.5 b. Calculate the standard deviation of a portfolio that is composed of 40 percent A and 60 percent B when the correlation coefficient between the...
The following table provides the expected return and the
standard deviation of returns for srocks and gold. Your client is
currently holding a portfolio of stocks and he is considering
whether he should replace half of the stocks with gold.
.
Question 1 Part a) The following table provides the expected return and the standard deviation of returns for stocks and gold. Your client is currently holding a portfolio of stocks and he is considering whether he should replace haif...
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...
letter b please
You have estimated the following probability distribution of returns for two stocks: Stock N Stock O Probability 0.20 0.30 Return 8% Probability 0.20 0.30 0.30 Return 26% 12 0.30 0.20 -4 0.20 -4 Calculate the expected rate of return and standard deviation for cach stock If the correlation between the returns on the two stocks is -0.40, calculate the portfolio returm and the standard deviation for portfolios containing 100%, 75 % , 50 % , 25 %...
You wish to invest in a portfolio of stocks A (50%) and B (50%). The risk free rate is 4%. AB Expected Return (%) 10 20 Beta 1.3 1.6 Correlation coefficient between returns = 0.3 What's the portfolio beta? Do not round.
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