Correlation coefficient between the two securities

Assignment Help Financial Management
Reference no: EM131072328

The covariance between stock A and stock B is 0.02. The standard deviation of stock A is 12% and that of stock B is 25%. Calculate the correlation coefficient between the two securities.

Reference no: EM131072328

Questions Cloud

Total cost is used to determine the price : A company has $45 per unit in variable costs and $1,200,000 per year in fixed costs. Demand is estimated to be 100,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price?
Calculate the value of the company cash flows : A U.S. company sells goods to a Canadian company for 8 million Canadian dollars, purchases supplies from Canadian companies for 7 million Canadian dollars, and incurs interest expense of 4 million Canadian dollars on Canadian loans. Calculate the US$..
New boutique line is expected to cost : A new boutique line is expected to cost $25 million in initial investment. It is estimated that the business will generate $7 million after-tax cash flow each year, for the next 5 years. At the end of 5 years it can be sold for $15 million. What is t..
Compare the modeling and experimental issues : Compare the modeling and experimental issues of the logistics system discussed in this chapter to those concerning the serial line discussed in chapter 7.
Correlation coefficient between the two securities : The covariance between stock A and stock B is 0.02. The standard deviation of stock A is 12% and that of stock B is 25%. Calculate the correlation coefficient between the two securities.
About the double-counting : Double-counting
Product from a factory to a terminal by rail : A new logistics system is being designed to transport one product from a factory to a terminal by rail. A simulation study is needed to estimate the following:
Compensating balances : Compensating balances have the following advantages EXCEPT:
Do you think licensing process is unnecessary hurdle meant : Do you think the licensing process for international medical graduates is an unnecessary hurdle meant to shield U.S. doctors from foreign competition?

Reviews

Write a Review

Financial Management Questions & Answers

  Bond makes annual coupon payments

Company just issued a 10 year 7% coupon bond. The face value of the bond is $1,000 and the bond makes annual coupon payments. If the required return on the bond is 10%, what is the bond’s price?

  New product line and requires an initial outlay

BE3 A company is considering a 5-year project that opens a new product line and requires an initial outlay of $85,000. The assumed selling price is $97 per unit, and the variable cost is $63 per unit. what is the financial break-even point?

  Considering a new project with cash inflows

Joshua Industries is considering a new project with cash inflows of $478,000 for the indefinite future. Cash costs are 68 percent of the cash inflows. The initial cost of the investment is $685,000. The tax rate is 34 percent and the unlevered cost o..

  Beta of equity and beta of assets

Big Bass Sound (BBS) is a thriving music business. You would like to understand the market risk of BBS and are looking to find its Beta of the Assets. BBS' Beta of Equity is 3, the beta of debt is 0.3, and the tax rate is 32%. BBS has 169 in debt out..

  Prepared to make monthly payments

You are prepared to make monthly payments of $390 beginning at the end of this month into an account that pays 8% interest compounded monthly. how many payments will you have made when your account balance reaches $30,000?

  Firm also has bond issue outstanding with total face value

Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15 a share. This stock was originally issued at $31 per share. The firm also has a bond issue outstanding with a total face value of $280,000 which is selling for 86 p..

  Motorist pay for fuel-efficient six-speed transmission

A new six-speed automatic transmission for automobiles offers an estimated 4% improvement in fuel economy compared to traditional four-speed transmissions in front-wheel drive cars. If a four-speed transmission car averages 30 miles per gallon and ga..

  Compute the mean of the random variable

Compute the mean of the random variable.  Compute the standard deviation of the random variable.

  What is the value of the stock today

Could I Industries just paid a dividend of $1.45 per share. The dividends are expected to grow at a 17 percent rate for the next 5 years and then level off to a 5 percent growth rate indefinitely. If the required return is 15 percent, what is the val..

  Value of continuously compounded nominal interest rate r

What is the value of the continuously compounded nominal interest rate r if the present value of 104 to be received after 1 year is the same as the present value of 110 to be received after 2 years?

  Expected rate of return from this investment opportunity

James Fromholtz is considering whether to invest in a newly formed investment fund. The fund’s investment objective is to acquire home mortgage securities at what it hopes will be bargain prices. The fund sponsor has suggested to James that the fund’..

  What is its expected return

Expected Return A company's current stock price is $86.40 and it is likely to pay a $5.40 dividend next year. Since analysts estimate the company will have a 13% growth rate, what is its expected return?

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