You have a portfolio of investment which consists of Stock A with a return of A%...
You have a portfolio of investment which consists of Stock A with a return of A% and Stock B with a return of B%. Given the following average returns and standard deviations for both Stock A and Stock B,
M(A) = 13%, M(B) = 51%
s(A) = 2%, s(B) = 12%
what is the absolute risk (standard deviation) of your portfolio assuming that the returns of Stock A and Stock B are uncorrelated?
Hint: Notice that the return of your portfolio will be A+B and the Variance Sum Laws apply to the variances not standard deviations. Answer should be in % accurate up to 2 decimal places.
Homework Answers
Add Answer to:
You have a portfolio of investment which consists of Stock A
with a return of A%...
0.43 Portfolio return and standard deviation Jamie Wong is thinking of building an investment portfolio containing...
0.43 Portfolio return and standard deviation Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 40% of the dollar value of the portfolio, and stock M will account for the other 60%. The historical returns over the last 6 years, 2013-2018, for each of these stocks are shown in the following table. Year Expected return Stock L Stock M 14% 20% 14 16 2013 2014 2015 2016 2017 2018 a....
Your portfolio consists of 20% stock X and 80% stock Y. The standard deviations of the...
Your portfolio consists of 20% stock X and 80% stock Y. The
standard deviations of the returns on X and Y are 10% and 30%
respectively. What is the standard deviation of your portfolio if
correlation coefficient between X and Y is .5? What is the standard
deviation of your portfolio if correlation coefficient between X
and Y is -1?
Your portfolio consists of 20% stock X and 80% stock Y. The standard deviations of the returns on X and...
You have a three-stock portfolio. Stock A has an expected return of 14 percent and a...
You have a three-stock portfolio. Stock A has an expected return of 14 percent and a standard deviation of 35 percent, Stock B has an expected return of 18 percent and a standard deviation of 53 percent, and Stock C has an expected return of 17 percent and a standard deviation of 35 percent. The correlation between Stocks A and B is .07. between Stocks A and C is 20, and between Stocks B and C is 19. Your portfolio...
QUESTION 54 Your portfolio consists of $50,000 invested in Stock X and $50,000 invested in Stock ...
please assist with excel function or calculator
QUESTION 54 Your portfolio consists of $50,000 invested in Stock X and $50,000 invested in Stock Y. Both stocks have return of 15%, betas of 1.6, and standard deviations of 30%-The returns ofthe two stocks are independent correlation coefficient between them, xy, is zero. Which of the following statements best describes the cl your 2-stock portfolio? Your portfolio has a beta greater than 1.6, and its expected return is greater than 15% Your...
2. You are the risk manager in a major investment bank. The bank's current portfolio consists...
2. You are the risk manager in a major investment bank. The bank's current portfolio consists of U.S. stocks (50%), bonds (20%), and derivatives (30%). The expected returns and standard deviations of these investments are Expected Return Standard Deviation Stocks Bonds Derivatives 13% 17% 25% 25% 9% 50% A trader comes up with an idea about investing in some new emerging markets: the markets of Polynesia, Micronesia, and New Caledonia. These markets have the follow- ing characteristics: 18% Expected Return...
You have a three-stock portfolio. Stock A has an expected return of 13 percent and a...
You have a three-stock portfolio. Stock A has an expected return of 13 percent and a standard deviation of 38 percent, Stock B has an expected return of 17 percent and a standard deviation of 43 percent, and Stock C has an expected return of 17 percent and a standard deviation of 43 percent. The correlation between Stocks A and B is 0.30, between Stocks A and C is 0.20, and between Stocks B and C is 0.05. Your portfolio...
3. You have a risky portfolio that yields an expected rate of return of 15% with...
3. You have a risky portfolio that yields an expected rate of return of 15% with a standard deviation of 25%. Draw the CAL for an expected return/standard deviation diagram if the risk free rate is 5%. a. What is the slope of the CAL? b. If your coefficient of risk aversion is 5, how much should you invest in the risky portfolio? 4. A pension fund manager is considering three mutual funds. The first is a stock fund, 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...
Consider the following information on a portfolio of three stocks: State of Probability of Stock A...
Consider the following information on a portfolio of three stocks: State of Probability of Stock A Stock B Stock C Economy State of Economy Rate of Return Rate of Return Rate of Return Boom .14 .11 .36 .51 Normal .51 .19 .21 .29 Bust .35 .20 − .20 − .39 a. If your portfolio is invested 44 percent each in A and B and 12 percent in C, what is the portfolio’s expected return, the variance, and the standard deviation?...
Ariel holds a $7,500 stock portfolio that consists of 4 stocks. 8. Portfolio risk and return...
Ariel holds a $7,500 stock portfolio that consists of 4
stocks.
8. Portfolio risk and return Ariel holds a $7,500 portfolio that consists of four stocks. Her Investment in each stock, as well as each stock's beta, is listed in the following table: Beta 0.80 Standard Deviation 9.00% Stock Omni Consumer Products Co. (OCP) Zaxatti Enterprises (ZE) Three Waters Co. (TWC) Mainway Toys Co. (MTC) Investment $2,625 $1,500 $1,125 $2,250 1.50 1.10 0.30 11.00% 16.00% 22.50% Suppose all stocks in...
0.43 Portfolio return and standard deviation Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 40% of the dollar value of the portfolio, and stock M will account for the other 60%. The historical returns over the last 6 years, 2013-2018, for each of these stocks are shown in the following table. Year Expected return Stock L Stock M 14% 20% 14 16 2013 2014 2015 2016 2017 2018 a....
Your portfolio consists of 20% stock X and 80% stock Y. The
standard deviations of the returns on X and Y are 10% and 30%
respectively. What is the standard deviation of your portfolio if
correlation coefficient between X and Y is .5? What is the standard
deviation of your portfolio if correlation coefficient between X
and Y is -1?
Your portfolio consists of 20% stock X and 80% stock Y. The standard deviations of the returns on X and...
You have a three-stock portfolio. Stock A has an expected return of 14 percent and a standard deviation of 35 percent, Stock B has an expected return of 18 percent and a standard deviation of 53 percent, and Stock C has an expected return of 17 percent and a standard deviation of 35 percent. The correlation between Stocks A and B is .07. between Stocks A and C is 20, and between Stocks B and C is 19. Your portfolio...
please assist with excel function or calculator
QUESTION 54 Your portfolio consists of $50,000 invested in Stock X and $50,000 invested in Stock Y. Both stocks have return of 15%, betas of 1.6, and standard deviations of 30%-The returns ofthe two stocks are independent correlation coefficient between them, xy, is zero. Which of the following statements best describes the cl your 2-stock portfolio? Your portfolio has a beta greater than 1.6, and its expected return is greater than 15% Your...
2. You are the risk manager in a major investment bank. The bank's current portfolio consists of U.S. stocks (50%), bonds (20%), and derivatives (30%). The expected returns and standard deviations of these investments are Expected Return Standard Deviation Stocks Bonds Derivatives 13% 17% 25% 25% 9% 50% A trader comes up with an idea about investing in some new emerging markets: the markets of Polynesia, Micronesia, and New Caledonia. These markets have the follow- ing characteristics: 18% Expected Return...
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...
Ariel holds a $7,500 stock portfolio that consists of 4
stocks.
8. Portfolio risk and return Ariel holds a $7,500 portfolio that consists of four stocks. Her Investment in each stock, as well as each stock's beta, is listed in the following table: Beta 0.80 Standard Deviation 9.00% Stock Omni Consumer Products Co. (OCP) Zaxatti Enterprises (ZE) Three Waters Co. (TWC) Mainway Toys Co. (MTC) Investment $2,625 $1,500 $1,125 $2,250 1.50 1.10 0.30 11.00% 16.00% 22.50% Suppose all stocks in...
Most questions answered within 3 hours.
-
Write a program to solve the Josephus problem, with the following
modification:
Sample Input:
./a.out n...
asked 1 hour ago -
At the start of a CD it is spinning at a rate of 525 rpm
(revolutions...
asked 2 hours ago -
4. Without doing any calculations, predict whether the observed
∆T would increase, decrease or remain the...
asked 3 hours ago -
Based on the range, which of the following sets of scores has
the greatest variability? 3,...
asked 4 hours ago -
Ripples in a pond travel at a velocity of 3 m/s with one peak
passing a...
asked 4 hours ago -
A man stands on the roof of a building of height 13.0 mm and
throws a...
asked 4 hours ago -
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 5 hours ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 5 hours ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 5 hours ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 5 hours ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 5 hours ago -
Why are polymers not typically casted into products?
asked 6 hours ago