Expect the daily return correlation to change

Assignment Help Financial Management

Reference no: EM131073250

Stock X was just added to the Dow 30 Index. Prior to the addition, the correlation between the daily returns of X and the other 29 stocks in the Index was +0.40. How do you expect the daily return correlation to change after X is added to the Dow 30 Index. Explain. (two or three sentences)

Reference no: EM131073250

Questions Cloud

Maturity bond with face value : A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 7.8%. What is the yield to maturity if the bond is selling for $940? What is the yield to maturity if the bond is selling for $1,000?

Bond with coupon rate : You buy a 20-year bond with a coupon rate of 8.8% that has a yield to maturity of 9.8%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 10.8%. What is your return over the 6 months?

The initial outlay for new project-opportunity cost : A company that sells common stock and uses the money to pay off a loan is increasing its use of financial leverage. The initial outlay for a new project is an example of an opportunity cost.

New bonds offer in order to sell at face value : General Matter’s outstanding bond issue has a coupon rate of 8%, and it sells at a yield to maturity of 7.00%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at face v..

Expect the daily return correlation to change : Stock X was just added to the Dow 30 Index. Prior to the addition, the correlation between the daily returns of X and the other 29 stocks in the Index was +0.40. How do you expect the daily return correlation to change after X is added to the Dow 30 ..

Maximum price per share schultz should pay for arras : Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. What is the maximum price per share Schultz should pay fo..

More appealing to you from the perspective of each lens : Discuss which company is more appealing to you from the perspective of each lens. Do you feel that additional data are needed to form an informed opinion? What other information would you request to make your decision and why?

Exceed an investment in the money market fund : You are going to invest in a stock mutual fund with a 6 percent front-end load and a 1.32 percent expense ratio. You also can invest in a money market mutual fund with a 3.1 percent return and an expense ratio of .10 percent. what annual return must ..

Exact expected real returns on the portfolio : Consider the following information about three stocks: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .25 .25 .30 .56 Normal .45 .22 .17 .14 Bust .30 .00 −.30 −.461. If the expected inflat..

User Account

All Pages