14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected values and standard devi- ations: r10.15, 2 0.20, v10.20,20.30. Moreover...

Question

Question

14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected va

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

(a Computation of Maximum Variance Portfolio or Optimy Given Information 0.20 A C andar deviati orrelation (o 0 20 C. 2 074 -

Add a comment

Answer 2

Similar Homework Help Questions

7. Assume you want to construct a portfolio from the following two securities. What is the...

7. Assume you want to construct a portfolio from the following two securities. What is the expected return on your portfolio if you invest $800,000 in Security 1 and $200,000 in Security 2? Security Expected Return Beta 1 14.0% 1.12 2 10.5% 0.94 A. 13.8% B. 13.6% C. 13.3% D. 12.9% E. 12.3% 7. Assume you want to construct a portfolio from the following two securities. What is the expected return on your portfolio if you invest $800,000 in Security...
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...
Question 2: Given three securities: Expected Standard Return Deviation Stock 10.15 0.20 Stock 20.20 0.30 Stock...

Question 2: Given three securities: Expected Standard Return Deviation Stock 10.15 0.20 Stock 20.20 0.30 Stock 30.08 0.10 Stock 3 Correlation of Returns Stock 1 Stock 2 1.00 0.20 0.30 1.00 0.80 1.00 (a) Find the expected return and standard deviation of a portfolio with 25% in stock 1, 50% in stock 2, and 25% in stock 3. (b) For the portfolio in part (a), find the covariance of its return with the return of an equally weighted portfolio of...

The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio P which invests in both the risk-free investment and the market portfolio.

The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio P which invests in both the risk-free investment and the market portfolio.a. How much should you invest in the market portfolio and the risk-free investment if you want portfolio P to have an expected return of 40%?b. How much should you invest in the market portfolio and the risk-free investment...
You are presently invested in the Luther Fund, a broad based mutual fund that invests in 7. (10 pts.) stocks and other securities. The Luther Fund has an expected return of 14% and a volatility of 20...

You are presently invested in the Luther Fund, a broad based mutual fund that invests in 7. (10 pts.) stocks and other securities. The Luther Fund has an expected return of 14% and a volatility of 20%. Risk-free Treasury bills are currently offering returns of 4%. You are considering adding a precious metals fund to your current portfolio. The metals fund has an expected return of 10%, a volatility of 30%, and a correlation of-20 with the Luther Fund. Will...
1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) an...

1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) and the second company is called M&L Corp. (MLC). Both of these companies are in consumer's goods industry and founded at the beginning of the 20th century. You do not know what the returns on these company stocks will be for the next year but you have some...

0/1pts Question 1 Suppose you have the following: Expected return Standard deviation 9% Asset A 10% 4% Asset B 5% If th...

0/1pts Question 1 Suppose you have the following: Expected return Standard deviation 9% Asset A 10% 4% Asset B 5% If the correlation between Asset A and Asset B returns is 0.60, and the portfolio has 40% invested in Asset A and the remainder in Asset B, what is the portfolio's standard deviation? Report in decimal form with at least four decimal places. You Answered Correct Answers 0.0539 (with margin: 0.0002) 0/1pts Question 1 Suppose you have the following: Expected...
Suppose we have the following information about two stocks: Beta Expected Return 11% 6% 1.6 Stock...

Suppose we have the following information about two stocks: Beta Expected Return 11% 6% 1.6 Stock 1 Stock 2 0.5 If the CAPM holds, what is the risk-free interest rate, the expected stock market return, and the market risk premium? (hint: Use CAPM equation for each separately; plug in known values and see if you can find unknown parameters through the two equations. Question #5 (30 points) Download monthly price data for Cigna (CI) and Amazon.com (MNZ) for the period...
Dropdown options: 1-risk/return 2-equal to/greater or less than 3-self contained/stand-alone 4-variance/standard deviation 5-variance/beta coefficient 6-diversifiable/non-diversiable 7-is/...

Dropdown options: 1-risk/return 2-equal to/greater or less than 3-self contained/stand-alone 4-variance/standard deviation 5-variance/beta coefficient 6-diversifiable/non-diversiable 7-is/ is not 8-diversifiable/non-diversifiable 9-random/non random 10-decreasing/increasing 11-2000+/500 12-reduces/increases 13-systematic of market/unsystematic or company-specific 14-diversifiable/non diversifiable 1. Basic concepts - Risk and return Professor Isadore (Izzy) Invest-a-Lot retired two years ago from Exceptional College, a small liberal arts college in North Carolina after teaching corporate finance and investment theory for 35 years. Yesterday, Izzy appear on EC LIVE, a television show produced for the students,...

14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected values and standard devi- ations: r10.15, 2 0.20, v10.20,20.30. Moreover...

Homework Answers

Add Answer to:
14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected values and standard devi- ations: r10.15, 2 0.20, v10.20,20.30. Moreover...

Post as a guest

Earn Coins

7. Assume you want to construct a portfolio from the following two securities. What is the...

you are considering investing in two securities. Security 1 has a expected return of 12% and a standard deviation of ret...

Question 2: Given three securities: Expected Standard Return Deviation Stock 10.15 0.20 Stock 20.20 0.30 Stock...

The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio P which invests in both the risk-free investment and the market portfolio.

You are presently invested in the Luther Fund, a broad based mutual fund that invests in 7. (10 pts.) stocks and other securities. The Luther Fund has an expected return of 14% and a volatility of 20...

1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) an...

0/1pts Question 1 Suppose you have the following: Expected return Standard deviation 9% Asset A 10% 4% Asset B 5% If th...

Suppose we have the following information about two stocks: Beta Expected Return 11% 6% 1.6 Stock...

Dropdown options: 1-risk/return 2-equal to/greater or less than 3-self contained/stand-alone 4-variance/standard deviation 5-variance/beta coefficient 6-diversifiable/non-diversiable 7-is/...

14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected values and standard devi- ations: r10.15, 2 0.20, v10.20,20.30. Moreover...

Homework Answers

Add Answer to: 14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected values and standard devi- ations: r10.15, 2 0.20, v10.20,20.30. Moreover...

Post as a guest

Earn Coins

Add Answer to:
14. (10 pts: 5 +5) Suppose that you want to invest 100 in two securities whose rates of return have the following expected values and standard devi- ations: r10.15, 2 0.20, v10.20,20.30. Moreover...