Reference no: EM133076334
Suppose that the standard deviation of returns from a typical share is about 0.60 (or 60%) a year. The correlation between the returns of each pair of shares is about 0.6.
a. Calculate the variance and standard deviation of the returns on a portfolio that has equal investments in 2 shares, 3 shares, and so on, up to 10 shares. (Use decimal values, not percents, in your calculations. Do not round intermediate calculations. Round the "Variance" answers to 6 decimal places. Round the "Standard Deviation" answers to 3 decimal places.)
No. of Shares Variance Standard Deviation (%)
1
2
3
4
5
6
7
8
9
10
b. How large is the underlying market variance that cannot be diversified away? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Market Risk:___________________
c. Now assume that the correlation between each pair of stocks is zero. Calculate the variance and standard deviation of the returns on a portfolio that has equal investments in 2 shares, 3 shares, and so on, up to 10 shares. (Use decimal values, not percents, in your calculations. Do not round intermediate calculations. Round the "Variance" answers to 6 decimal places. Round the "Standard Deviation" answers to 3 decimal places.)
No. of Shares Variance Standard Deviation (%)
1
2
3
4
5
6
7
8
9
10
|
Determine the Sunland Company materials price variance
: Sunland Company has a materials price standard of $4 per pound. Determine the Sunland Company materials price variance
|
|
Portfolio management process
: Assume you are a portfolio manager for an institutional investment company speaking to a client. An investment policy statement (IPO) is an important part of th
|
|
Determine the cost of equity
: If price-to-book ratio at the end of 2005 equals 1.00, and return on beginning of year equity is expected to remain constant, then determine the cost of equity
|
|
Calculate walmart cost of capital
: Using this information, please calculate Walmart's cost of capital to a percentage with two decimals (for example 1.87%).
|
|
Calculate the variance and standard deviation
: Suppose that the standard deviation of returns from a typical share is about 0.60 (or 60%) a year. The correlation between the returns of each pair of shares is
|
|
Compare alpha equity fund
: Tom Cruise wants to compare Alpha equity fund against the S&P 500. Alpha fund uses the idea of Risk Allocation by investing in the same firms as in the S&P 500
|
|
What the net present value of this investment
: Your bank is considering a new check clearing machine to automate the clearing house function. What the Net Present Value of this investment
|
|
Case study on bharti airtel
: a) Bharti Airtel plans to expand its network and prepare for the launch of 5G services. The board hadapproved raising up to 21,000 crore by issuing additional o
|
|
Determine the mark-up percentage on product cost
: The total cost of $35 is made up of $24 variable cost and $11 fixed cost. The desired profit is $8 per unit. Determine the mark-up percentage on product cost
|