Compute the risk and return for portfolio comprised

Assignment Help Financial Management
Reference no: EM131995355

The common stock for companies A and B have the expected returns and standard deviations given below; the expected correlation coefficient between the two stocks is

-0.5

                                                Rj                                 sj                                

Company A                             12                                7

Company B                             8                                  4

Compute the risk and return for a portfolio comprised of three-fourth invested in the stock of company A and the remaining invested in the stock of company B.

Reference no: EM131995355

Questions Cloud

What is the average accounts receivable figure : The cost of production is 84 percent of the selling price. What is the average accounts receivable figure?
Preferable to investor with strong risk appetite : Which stock would be preferable to an investor with strong risk appetite.
What is the default risk premium on corporate bonds : If the liquidity premium is 1%, what is the default risk premium on the corporate bonds?
Calculate the worst-case npv : Calculate the best-case NPV. Calculate the worst-case NPV.
Compute the risk and return for portfolio comprised : Compute the risk and return for a portfolio comprised of three-fourth invested in the stock of company A and the remaining invested in the stock of company B.
Average beta of the new stocks added to portfolio : What should be the average beta of the new stocks added to the portfolio?
What are the bond equivalent and discount yields : If the term of the instrument is 90 days, what are the bond equivalent and discount yields on this investment?
What is the redan total carrying cost : What is the Redan's total carrying cost? What is the Redan's total ordering cost? What is the Redan's total ordering cost?
Calculating costs and break-even : If the selling price is $10.85 per unit, what is the NSI break-even on a cash basis? What are the total costs for the year?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the margin account balance hedge fund

A trader takes the long position and a hedge fund takes a short position on ten 1-month S&P 500 futures contracts at 1300. A single S&P 500 futures contract equals (250)X (Index Value). What is the margin account balance (Indicate gain or loss for ea..

  Research to develop new computer game

KADS, Inc., has spent $420,000 on research to develop a new computer game. The firm is planning to spend $220,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $52..

  What should the price of the stock be today

You have been asked to value a stock. Stock AAA is expected to pay a dividend of $2 next year (t=1) and $2.20 the year after (t=2). After the end of the second year, stock or equity analyst expect dividends to grow at a constant rate of 4.0% per year..

  Calculate the firms new long-term debt added during the year

During the year, Belyk Paving Co. had sales of $2,383,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,442,000, $436,700, and $491,700, respectively.  Calculate the firm's new long-term debt added during ..

  Why would a higher premium result in lower stock prices

What does it mean to say that investors are demanding a "higher premium"?- Why would a higher premium result in lower stock prices?

  What are some of the possible explanations for this fall

Using the ROE framework, what are some of the possible explanations for this fall?

  What is the time-driven activity-based costing method

What is the time-driven activity-based costing method (TDABC), and how does it differ from the methods listed below

  What are the implications for valuation

A lower cost of capital will lead to higher firm value only if operating income goes up as cost of capital goes down. What are the implications for valuation?

  Why the demand curve for an item would be more elastic

The key condition for equilibrium to occur in a market is: Which of the following is a reason why the demand curve for an item would be more elastic? Without taxes, the market price per bag of apples is $5. With a $2 tax per bag of apples, buyers now..

  Bonds has the least amount of interest rate risk

Which of the following bonds has the LEAST amount of interest rate risk?

  Fixed-rate mortgage to buy new home

You need a 35-year, fixed-rate mortgage to buy a new home for $340,000. Your mortgage bank will lend you the money at an APR of 6.35 percent for this 420-month loan. However, you can afford monthly payments of only $1,800, so you offer to pay off any..

  What is the price of the bonds today

Assume investors are risk-neutral. If the bonds are nonsalable, what is the price of the bonds today?

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