Determine the expected return and standard deviation

Assignment Help Finance Basics

Reference no: EM1363685

Expected returns and standard deviation on stocks A and B are E(RA) = 0.15, E(RB) = 0.22, StdDevA = 0.10 and StdDevB = 0.23

Calculate the expected return and standard deviation of a portfolio that is composed of 35 percent A and 65 percent B when the correlation between the returns on A and B is 0.6

Calculate the expected return and standard deviation of a portfolio that is composed of 35 percent A and 65 percent B when the correlation between the returns on A and B is -0.6

How does the correlation between the returns on A and B affect the standard deviation of the portfolio?

Need help answering these questions:
a. What financial concept or principle is this problem asking you to solve?
b. What are some business decisions that a manager would be able to make after solving the problem?
c. Is there any additional information missing from the problem that would enhance the decision-making process?
d. Without showing mathematical calculations, explain in writing how you would solve the problem.

Reference no: EM1363685

Questions Cloud

Attributes of public health management : Then say why you think that these types of characteristics would be desirable attributes of public health management.

Explain effects of compaction on normal processing : What about if you upgrade to memory that can be read or written to in 1nsec? Comment briefly on the effects of compaction on normal processing.

Decisions to continue or discontinue business segment : In considering the decision to continue or discontinue a segment of the business, the business should focus on:

Find the mass of the block on the left : What is the mass of the block on the left. Find this angle of the thread.

Determine the expected return and standard deviation : Compute the expected return and standard deviation of a portfolio that is composed of 35% A and 65% B when the correlation between the returns on A and B is 0.6

Role of it in the health care : What is the role IT has on measuring and improving the quality of care being delivered and how will the electronic medical record (EMR)/electronic health record (EHR) help or hinder the delivery of health care?

Tax loss carryforward and valuation allowance : What are some examples of positive and negative evidence used to establish the need for a valuation allowance for a tax loss carryforward? What is the effect of the valuation allowance on the free cash flow forecast?

Write program to read integers and finds largest of them : Write a program that reads integer, finds the largest of them, and counts its occurrences. Assume thant the input ends with number 0. suppose that you entered 3 5 3 5 5 5 0.

Describe the traditional management approaches : Describe the traditional management approaches that can be used to deal with time, quality and cost in construction industry and explain to what extend they can be solved or mitigated.

User Account

All Pages