Calculate the expected return of a portfolio

Assignment Help Finance Basics
Reference no: EM131950973

Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .091, E(RB) = .151, σA = .361, and σB = .621.

a-1. Calculate the expected return of a portfolio that is composed of 36 percent Stock A and 64 percent Stock B when the correlation between the returns on A and B is .51. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expected return % 

a-2. Calculate the standard deviation of a portfolio that is composed of 36 percent Stock A and 64 percent Stock B when the correlation between the returns on A and B is .51. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Standard deviation % 

b. Calculate the standard deviation of a portfolio with the same portfolio weights as in part (a) when the correlation coefficient between the returns on Stocks A and B is -.51. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Standard deviation %

Reference no: EM131950973

Questions Cloud

How can you trust others to provide helpful criticism : If people are likely to be biased or unfair in their assessment of you, how can you trust others to provide helpful criticism?
How can we monitor risk and return performance for a company : How can we monitor risk and return performance for a company? How also can we inform leaders on the opportunities of the possible risk or return?
Create a presentation about propose strategies or solutions : Create a 5-minutes, 2-slides voice-over presentation about Propose strategies or solutions to address those challenges.
Calculate the expected return of each of the stocks : Calculate the expected return of each of the following stocks. (Do not round intermediate calculations and enter your answers
Calculate the expected return of a portfolio : Calculate the expected return of a portfolio that is composed of 36 percent Stock A and 64 percent Stock B when the correlation between the returns
Why the regression analysis step is central to si process : Provide an explanation of why the regression analysis step is central to the SI process. Why so much emphasis has been placed on regression analysis.
What would be the consequences if libor raises : Why would LIBOR rise? What would be the consequences if LIBOR raises? As an investor, how should you be looking at LIBOR? Do you want LIBOR to go up
Can the option be exercised and the holder makes a loss : Under what circumstances will the option be exercised? Can the option be exercised and the holder makes a loss?
Discuss the type of unemployment : Technological unemployment is a term used to describe the lack or loss of jobs due to technological changes or innovations.

Reviews

Write a Review

Finance Basics Questions & Answers

  Finding money to finance small business can be real

finding money to finance your small business can be a real challenge. you might look to the traditional avenues such as

  Which method is halliburton likely to prefer

If Halliburton enters a forward contract, agreeing to buy ¥250 million in one year at an exchange rate of ¥98 = $1, how many dollars does it need today if it plans to invest the dollars at the U.S. interest rate of 6%?

  What are the appropriate null and alternative hypotheses

sample yields a mean of 1.80 and a standard deviation of 1.30.- What are the appropriate null and alternative hypotheses?  -  Is this a one-tailed or two-tailed test?

  Systematic risk and nonsystematic risk

Using examples, explain the difference between systematic risk and nonsystematic risk. Explain why the distinction is important for both investors and issuers of stock?

  In december 2007 dukrsquos board announced that it planned

duke energy corporation duk is a utility-based holding company involved in providing natural gas and electricity. the

  Describe the type of economic or other conditions in mexico

Given the factors that affect the value of a foreign currency, describe the type of economic or other conditions in Mexico that could cause the Mexican peso to weaken and thereby adversely affect your business.

  What is the expected yield on the market portfolio

What is the expected yield on the market portfolio at a time when Treasury bills yield 6% and a stock with a beta of 1.4 is expected to yield 18%?

  Potential personal liability for injuries

Explain potential personal liability for injuries to consumers caused by the product.

  How you think buffett might have evaluated the costs

With these considerations in mind, explain how you think Buffett might have evaluated the costs and benefits of the following long investment strategies: purchased call, written put, long index swap, long index futures, written collar.

  Alculate the npv for both track hoes which should choose

The revenue from either track hoe is $95.00 per hour. Using a useful life of four years, a salvage value equal to 20% of the purchase price, 1,200 billable hours per year, and a MARR of 20%, calculate the NPV for both track hoes. Which track hoe shou..

  Reduction of business costs

Improving a firm's sales and profit - Improving a company's customer services and Implementing flexible scheduling - Reduction of business costs

  Administrators and machinist

Giant manufacturing is a local Massachusetts employer that employs 75 people in various capacities from management to office administrators and machinist.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd