Consider a 2 asset portfolio with 60% in Google Inc. (GOOG) and 40% in John Deere (DE). Google has a standard deviation...
Consider a 2 asset portfolio with 60% in Google Inc. (GOOG) and 40% in John Deere (DE). Google has a standard deviation of 60%, John Deere has a standard deviation of 45% and their correlation is 0.2. What is the standard deviation of returns of the portfolio?
You bought 200 shares of Microsoft at $50 per share, 100 shares of IBM for $100 a share and 300 shares of Amazon.com for $25 per share. What is the portfolio weight on the Amazon.com holding?
Homework Answers
Portfolio SD :
A = Google
B = John Deere
| Given Details | |
| Particulars | Amount |
| Weight in A | 0.6 |
| Weight in B | 0.4 |
| SD of A | 60% |
| SD of B | 45% |
| r(1,2) | 0.2 |
| Portfolio SD = SQRT[((Wa*SDa)^2)+((Wb*SDb)^2)+2*(wa*SDa)*(Wb*SDb)*r(1,2)] |
| =SQRT[((0.6*0.6)^2)+((0.4*0.45)^2)+2*(0.6*0.6)*(0.4*0.45)*0.2] |
| =SQRT[((0.36)^2)+((0.18)^2)+2*(0.36)*(0.18)*0.2] |
| =SQRT[0.18792] |
| 43.35% |
Part B:
| Share | Qty | Price | Investment |
| Microsoft | 200 | 50 | 10000 |
| IBM | 100 | 100 | 10000 |
| Amazon | 300 | 25 | 7500 |
| Total Invesstment | 27500 | ||
Amzon weight in Portfolio = Inv in Amazon / Total Invetsment
= 7500 / 27500
= 0.2727 i.e 27.27%
Add Answer to:
Consider a 2 asset portfolio with 60% in Google Inc. (GOOG) and 40% in John Deere (DE). Google has a standard deviation...
8. Calculate the PORTFOLIO Expected Return and standard deviation of a 60/40 Portfolio of Asset A...
8. Calculate the PORTFOLIO Expected Return and standard deviation of a 60/40 Portfolio of Asset A and asset B. ASSET A 60% ASSET B 40% Return in State Return in State R (A) R(B) PORTFOLIO Rport in Sate S R(P)i Deviation R(P)i Pr Portfolio (Deviation Portfolio 2 State S Squared Dev*Pr Pr State P 0.4 0.6 E(R) E(R) Portfolio Portfolio Var Portfolio sd - 9. Compare the Risk-Return of the two stocks ALONE and the joint risk in the portfolio...
B13. (Excel: Portfolio returns and stand 996 a standard deviation of 10%, and HMT has an...
B13. (Excel: Portfolio returns and stand 996 a standard deviation of 10%, and HMT has an expected return of 12% and a standard ation of 20%. The portfolio return and risk, of course, depend on the portfolio weight ard deviations) ARC has an expected return of dev,. rtfolio returns and stan- the correlation between ARC and HMT returns. Calculate the portfolio returns and ad dard deviations for the weights and correlations shown in the table PORTFOLIO STANDARD DEVIATION WEIGHTS FOR...
For Dell, suppose its mean and standard deviation are 10% and 20%. For IBM, suppose its...
For Dell, suppose its mean and standard deviation are 10% and 20%. For IBM, suppose its mean and standard deviation are 6% and 15%. Their correlation coefficient is 0.25. The risk-free rate is 2%. The optimal risky portfolio consists of 40% in IBM and 60% in Dell. [Note: This is an important exercise to obtain some intuition about CAPM. However, neither the formulas in Part 2 nor the algebraic proof in Part 5 are required for this course. If I...
P8-13 (similar to) Question Help Portfolio return and standard deviation Personal Finance Problem Jamie Wong is...
P8-13 (similar to) Question Help Portfolio return and standard deviation Personal Finance Problem Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock Lwill represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The historical returns over the next 6 years, 2013 - 2018, for each of these stocks are shown in the following table: a. Calculate the actual portfolio return, fp, for each of...
QUESTION 2: The returns on shares A and B in four equally likely states at the...
QUESTION 2: The returns on shares A and B in four equally likely states at the end of next year are summarized below. 30 State Probability Rates of Rates of Return of Return of Share A Share B 0.3 -25 10.4 50 25 0.2 5 -40 0.1 40 30 a. Calculate the expected return, variance and standard deviation for each share. b. Compute the coefficient of correlation for the returns to these shares. c. Calculate the expected return, variance and...
2. Consider a market with only two risky stocks, A and B, and one risk-free asset....
2. Consider a market with only two risky stocks, A and B, and one risk-free asset. We have the following information about the stocks. Stock A Stock B Number of shares in the market 600 400 Price per share $2.00 $2.50 Expected rate of return 20% Standard dev.of return 12% Furthermore, the correlation coefficient between the returns of stocks A and B is PABWe assume that the returns are annual, and that the assumptions of CAPM hold. (a) (4 points)...
Answer all questions 1.10 Problems * lass A with 40 students has a mean age of...
Answer all questions
1.10 Problems * lass A with 40 students has a mean age of 19.7 years. Class B with 60 students has a mean age of 20.3 years. What is the average age of classes A and B combi ined? 2. I n a certain study 300 men averaged 11,000 miles in one year of automobile driving. 200 women av combined? eraged 8000 miles for one year. What is the average of the two groups 3. A salesmen...
10) On March 31, Adolpha, Inc. reported the following information on its financial statements. Total current...
10) On March 31, Adolpha, Inc. reported the following information on its financial statements. Total current assets Total long-termassets Total current liabilities Total long-term debt 5421374 $212864 $675.218 $2005,286 What is the available net working capital for Adolpha, Inc.? (A) $253,844 B) -$132,366 C) $121,578 D) $1,873,020 Answer: debt-equity ratio and a 11) A lending institution would prefer that a firm have a times interest earned ratio. A) higher; higher B) higher; lower C) lower, higher D) lower; lower Answer:...
1. Calculate the mean and standard deviation for each variable using formulas or functions. 2. Calculate...
1. Calculate the mean and standard deviation for each variable
using formulas or functions. 2. Calculate descriptive statistics
for each variable using the Analysis Toolpak. 3. Calculate the
coefficient of variation for each variable. What general
interpretation can you make from these values? 4. Calculate the
correlation between Revenue and Employees using a formula.
Calculate the coefficient of determination. 5. Create a correlation
matrix for the eight numerical variables. Note any relationship of
interest
Rank
COMPANY NAME
City
State
Revenue...
8. Calculate the PORTFOLIO Expected Return and standard deviation of a 60/40 Portfolio of Asset A and asset B. ASSET A 60% ASSET B 40% Return in State Return in State R (A) R(B) PORTFOLIO Rport in Sate S R(P)i Deviation R(P)i Pr Portfolio (Deviation Portfolio 2 State S Squared Dev*Pr Pr State P 0.4 0.6 E(R) E(R) Portfolio Portfolio Var Portfolio sd - 9. Compare the Risk-Return of the two stocks ALONE and the joint risk in the portfolio...
B13. (Excel: Portfolio returns and stand 996 a standard deviation of 10%, and HMT has an expected return of 12% and a standard ation of 20%. The portfolio return and risk, of course, depend on the portfolio weight ard deviations) ARC has an expected return of dev,. rtfolio returns and stan- the correlation between ARC and HMT returns. Calculate the portfolio returns and ad dard deviations for the weights and correlations shown in the table PORTFOLIO STANDARD DEVIATION WEIGHTS FOR...
For Dell, suppose its mean and standard deviation are 10% and 20%. For IBM, suppose its mean and standard deviation are 6% and 15%. Their correlation coefficient is 0.25. The risk-free rate is 2%. The optimal risky portfolio consists of 40% in IBM and 60% in Dell. [Note: This is an important exercise to obtain some intuition about CAPM. However, neither the formulas in Part 2 nor the algebraic proof in Part 5 are required for this course. If I...
P8-13 (similar to) Question Help Portfolio return and standard deviation Personal Finance Problem Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock Lwill represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The historical returns over the next 6 years, 2013 - 2018, for each of these stocks are shown in the following table: a. Calculate the actual portfolio return, fp, for each of...
QUESTION 2: The returns on shares A and B in four equally likely states at the end of next year are summarized below. 30 State Probability Rates of Rates of Return of Return of Share A Share B 0.3 -25 10.4 50 25 0.2 5 -40 0.1 40 30 a. Calculate the expected return, variance and standard deviation for each share. b. Compute the coefficient of correlation for the returns to these shares. c. Calculate the expected return, variance and...
2. Consider a market with only two risky stocks, A and B, and one risk-free asset. We have the following information about the stocks. Stock A Stock B Number of shares in the market 600 400 Price per share $2.00 $2.50 Expected rate of return 20% Standard dev.of return 12% Furthermore, the correlation coefficient between the returns of stocks A and B is PABWe assume that the returns are annual, and that the assumptions of CAPM hold. (a) (4 points)...
Answer all questions
1.10 Problems * lass A with 40 students has a mean age of 19.7 years. Class B with 60 students has a mean age of 20.3 years. What is the average age of classes A and B combi ined? 2. I n a certain study 300 men averaged 11,000 miles in one year of automobile driving. 200 women av combined? eraged 8000 miles for one year. What is the average of the two groups 3. A salesmen...
10) On March 31, Adolpha, Inc. reported the following information on its financial statements. Total current assets Total long-termassets Total current liabilities Total long-term debt 5421374 $212864 $675.218 $2005,286 What is the available net working capital for Adolpha, Inc.? (A) $253,844 B) -$132,366 C) $121,578 D) $1,873,020 Answer: debt-equity ratio and a 11) A lending institution would prefer that a firm have a times interest earned ratio. A) higher; higher B) higher; lower C) lower, higher D) lower; lower Answer:...
1. Calculate the mean and standard deviation for each variable
using formulas or functions. 2. Calculate descriptive statistics
for each variable using the Analysis Toolpak. 3. Calculate the
coefficient of variation for each variable. What general
interpretation can you make from these values? 4. Calculate the
correlation between Revenue and Employees using a formula.
Calculate the coefficient of determination. 5. Create a correlation
matrix for the eight numerical variables. Note any relationship of
interest
Rank
COMPANY NAME
City
State
Revenue...
Most questions answered within 3 hours.
-
At the start of a CD it is spinning at a rate of 525 rpm
(revolutions...
asked 26 minutes ago -
4. Without doing any calculations, predict whether the observed
∆T would increase, decrease or remain the...
asked 1 hour ago -
Based on the range, which of the following sets of scores has
the greatest variability? 3,...
asked 2 hours ago -
Ripples in a pond travel at a velocity of 3 m/s with one peak
passing a...
asked 2 hours ago -
A man stands on the roof of a building of height 13.0 mm and
throws a...
asked 2 hours ago -
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 3 hours ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 4 hours ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 4 hours ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 4 hours ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 4 hours ago -
Why are polymers not typically casted into products?
asked 4 hours ago -
When rolling a die 129 times, what is the probability of rolling
a 6 no more...
asked 4 hours ago