What is standard deviation of two-asset portfolio of stock

Assignment Help Financial Management

Reference no: EM131059085

1. Karen wants to build a two-asset portfolio that includes a proxy for the market portfolio (the S&P 500) and the risk-free asset that has an expected return of 9.04%. What percentage of her portfolio would be invested in the S&P 500 if the return on the T-bill is 2.5% and the expected return on the S&P 500 is 8.5%

2. What is the standard deviation of a two-asset portfolio comprised of Stock A and Stock B if both Stock A and Stock B have a variance of 0.2209, the correlation coefficient between the two stocks is -0.17, and Stock A makes up 24% of the portfolio?

Reference no: EM131059085

Questions Cloud

About young woman who quit successful corporate career : After watching a movie about a young woman who quit a successful corporate career to start her own baby food company, Julia Day decided that she wanted to do the same. George Yates believes that there is an equally likely chance for success. What is ..

What is included in the terminal cash flow : What is included in the annual differential/ incremental cash flows? What is the impact of an increase or decrease in depreciation expense? What is included in the terminal cash flow?

What is the size of the required donation : Fanshawe collge was gien a donation that will provide semi-annual scholarships payments of $4000, to be awarded starting 3 years from now. If the money is invested at 6% compounded quaterly, what is the size of the required donation?

Use the four possible combinations of time and interest : You borrow $16,500 at 16% interest on Jauary 27th of a leap year. The amount is to be repaid on July 1st of the same year. What amount is needed to settle the debt at the end of the tem? Use the four possible combinations of time and interest.

What is standard deviation of two-asset portfolio of stock : What is the standard deviation of a two-asset portfolio comprised of Stock A and Stock B if both Stock A and Stock B have a variance of 0.2209, the correlation coefficient between the two stocks is -0.17, and Stock A makes up 24% of the portfolio?

What price will investors be willing to pay for the bond : Xerox wants to issue bonds in order to take advantage of historically low interest rates. The bonds will have a 2.5% coupon rate (interest paid semiannually) and a maturity of 25 years. If market interest rates are at 3% at the time the bonds are iss..

What proportion of your funds is invested in asset : You own two risky assets, both of which plot on the SML. Asset A has an expected return of 12.37% and a beta of 1.40. Asset B has an expected return of 14.13% and a beta of 1.65. If your portfolio beta is the same as the market portfolio, what propor..

What is the standard deviation of returns on portfolio : You construct an equally weighted, two asset portfolio between ACME Corp, and American company, and Pocky Pies, a Korean company. The standard deviation of returns on ACME’s shares is 20% and 75% on Pocky. Because of international diversification, th..

Principle and interest portions of the first payment : A $200,000 mortgage with a 30 year term, and a 5% annual interest rate requires a monthly payment of $1073.64. What are the principle and interest portions of the first payment? What are the principle and interest portions of the second payment?

User Account

All Pages