1 the expected return of security a is 10 with a standard

Assignment Help Corporate Finance

Reference no: EM13381150

1) The expected return of Security A is 10% with a standard deviation of 20%. The expected return of Security B is 15% with a standard deviation of 30%. Securities A and B have a correlation of 0.3. The market return is 12% with a standard deviation of 18% and the risk free rate is 3.5%. What is the Sharpe ratio of a portfolio if 40% of the portfolio is in Security A and the remainder in Security B?

2) The current price of Stock Y is $50. It is expected that the stock will pay 4 quarterly dividends of $0.25 each and sell for $52 in one year. The risk-free rate is 3.5%. The expected return on the market portfolio is 12% with a standard deviation of 18%. Assume the market is in equilibrium. What is the beta of Stock Y?

3) The market expected return is 8% with a standard deviation of 18%. The risk free rate is 3.5%. Security XYZ has just paid a dividend of $5 and has a current price of $80. What is the beta of Security XYZ if its dividend is expected to grow at 2% per year indefinitely?

4)The income yield and capital gain yield of a stock are 6% and 5%, respectively. The stock paid a quarterly dividend of $1.5 per share during the year. What should the stock sell for today?

5) Suppose you plan to create a portfolio with two securities: A and B. A has an expected return of 35% with a standard deviation of 22%. B has an expected return of 20% with a standard deviation of 9%. The correlation between the returns of these two securities is perfectly negative. What percentage of your investment should be in A to make the portfolio risk free?

What would be the expected return on the portfolio?

6) Suppose you own a two-security portfolio. You have 54% of your money invested in Security X and the remainder in Security Y. The standard deviations of Securities X and Y are 30 percent and 25 percent. What is the correlation between the two securities if the portfolio standard deviation is 0.1414?

7) Stock A: expected return= 10%; standard deviation= 40%

Stock B: expected return= 20%; standard deviation= 23%

You short sold 200 shares of A at 15 $ per share and purchased 500 shares of B at 15$ per share. The correlation between securities is -0.32. What is the standard deviation of the portfolio?

Reference no: EM13381150

Questions Cloud

Finance is fun ltd has the following structure 10000000 : finance is fun ltd has the following structure 10000000 four year bonds with a coupon of 8.5 trading at 94 and 3

The following are balance sheets for the genatron : the following are balance sheets for the genatron manufacturing corporation for the years 2010 and 2011 balance

Present equations all steps of calculations and the answers : present equations all steps of calculations and the answers in a word document formatted in the current apa style.1. a

Select only one of the following questions to answeris it : select only one of the following questions to answeris it possible for investors to determine whether the

1 the expected return of security a is 10 with a standard : 1 the expected return of security a is 10 with a standard deviation of 20.nbsp the expected return of security b is 15

The manager of sensible essentials conducted an excellent : the manager of sensible essentials conducted an excellent seminar explaining debt and equity financing and how firms

Ratios and financial planning at east coast yachtsafter : ratios and financial planning at east coast yachtsafter dans analysis of east coast yachts cash flow at the end of our

Assume that for the time in question you have 2000 cases in : assume that for the time in question you have 2000 cases in the proportions above. commercial insurances average 110 of

Your team of employees and you are working on a big project : your team of employees and you are working on a big project for the hospitals chief financial officer cfo. together you

User Account

All Pages