Explain how a portfolio should be constructed

Reference no: EM13839254

The management of Gawain plc is evaluating two projects whose returns depend on the future state of the economy as shown below:

The project (or projects) accepted would double the size of Gawain.

Required

(a) Explain how a portfolio should be constructed to produce an expected return of 20 per cent.

(b) Calculate the correlation between projects A and B, and assess the degree of risk of the portfolio in (a).

(c) Gawain’s existing activities have a standard deviation of 10 per cent. How does the addition of the portfolio analysed in (a) and (b) affect risk?

Reference no: EM13839254

Questions Cloud

Discussion of the honeymoon effect : Directions: Discuss one observation of each of the three influences I mentioned from three different presidents. Also, find one "honeymoon effect" from any president other than Obama, and describe how pronounced it is. For example, choose one preside..

What is role of socio-cultural competencies for manager : What is the role of socio-cultural competencies for the professional manager in making a positive difference to society?

The development of modern law enforcement : Compare (similarities and differences) the development of modern law enforcement agencies and systems in the northeast, southeast, and western regions of the United States. •Compare (similarities and differences) the development of modern law enforce..

Develop an individual leadership reflection and action plan : Develop an Individual Leadership Reflection and Action Plan that will provide a reflection on your leadership style and potential. The paper should provide a personal leadership philosophy and a discussion on how that philosophy might, or might n..

Explain how a portfolio should be constructed : Explain how a portfolio should be constructed to produce an expected return of 20 per cent. Calculate the correlation between projects A and B, and assess the degree of risk of the portfolio in (a). Gawain’s existing activities have a standard deviat..

Research paper - topic- to vaccinate or not to vaccinate : Write a research Paper on given topic- Research Paper - Topic: To Vaccinate or Not to Vaccinate

Calculate the amount of heat transferred : A closed rigid vessel having a volume of 0.566 m3 is filled with steam at 0.800 MPa and 250.°C. Heat is transferred from the steam until it exists as saturated vapor. Calculate the amount of heat transferred during this process.

Price elasticity of demand for a commodity : Explain why each of the factors may influence the own price elasticity of demand for a commodity - Consumer preferences, that is, whether consumers regard the commodity as a 'luxury'' or a 'necessity''.

Calculate the angle below the horizontal below : A child throws a ball with an initial speed of 8.00 m/s at an angle of 40.0° above the horizontal. The ball leaves her hand 1.00 m above the ground and experience negligible air resistance. I know how to calculate the velocity before the ball hits th..

User Account

All Pages