Q 1 consider portfolio p that is comprised from two stocks

Assignment Help Finance Basics
Reference no: EM13355317

Q. 1) Consider portfolio P that is comprised from two stocks, A also B. Stock A has a standard deviation of return (A) of 25% while stock B has a standard deviation of return () of 40%. The correlation co-efficient between the two stocks () is 0.5.

a) Graph (sketch) the relation between weight of stock A also variance of portfolio P. Plot weight of stock A along horizontal axis.

b) Deduce formula for weights of stocks A also B at which variance of portfolio P is minimal. Hint: Consider the variance of portfolio P as a function of the weight of stock A, A, also minimize this function with respect to this weight. Find the values of weights.

2) Investors Robert also Linda have coefficients of risk aversions equal to 1 also 2, respectively. They trade risky portfolio P with other investors also can borrow at 2% also lend at 1% in T-bill market. In particular, Robert borrows 20% of his complete portfolio while Linda lends 20% of her complete portfolio. Find the expected return also the variance of return of portfolio P.

Reference no: EM13355317

Questions Cloud

Q1 you are presented the investment in local business for : q1. you are presented the investment in local business for 500000 also told that business can be sold after 1 year.
Qxyz newly reported 48909 of sales 16389of operating costs : q.xyz newly reported 48909 of sales 16389of operating costs other than reduction also 5402 of depreciation. company
Qnational newsmagazine publishes the article on efforts to : q.national newsmagazine publishes the article on efforts to limiting smoking in public places. then the magazine gets
Q on april 14 1994 bill shaw retired policeman offered to : q. on april 14 1994 bill shaw retired policeman offered to sell thurgood his 1965 mustang convertible for 1000. thur
Q 1 consider portfolio p that is comprised from two stocks : q. 1 consider portfolio p that is comprised from two stocks a also b. stock a has a standard deviation of return a of
Qsuppose you have 20000 total if you put 14000 in stock a : q.suppose you have 20000 total. if you put 14000 in stock a also remainder in stock b what will be the expected return
Q you have observed the given returns on intc corporations : q. you have observed the given returns on intc corporations stock over past 5 years -25 -36 9 11 also 17.a find out
Qthe following accounts billions are taken from balance : q.the following accounts billions are taken from balance sheet of well-known depository financial institutionnow
Q let the following case on november 1 2013 incoming : q. let the following case. on november 1 2013 incoming federal reserve chaireach son janet yellin states unhappiness to

Reviews

Write a Review

Finance Basics Questions & Answers

  What is american eagle outfitters dividend yield

American Eagles Outfitters (ticker: AEO) recently paid a quarterly dividend of $0.125. It's current share price is $12.73. What is American Eagle Outfitters' dividend yield rounded up to the nearest percent?

  What will net increase or decrease in the annual flotation

The amortization of flotation costs reduces taxes, and thus provides an annual cash flow. What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place?

  Determine the impact on profits of accepting the order

Gamboa's Corporation has a capacity of 50,000 units per year and is currently selling all 50,000 for $500 each. Keller Corporation has approached Gamboa about buying 5,000 units for only $450 each.

  Compute the coefficient of variation

Greengage, Corporation, a successful nursery, is planning several expansion projects. All of the alternatives promise to produce an acceptable return.

  Floating exchange rate regime

Suppose that the U.S. Congress imposes an increase in taxes. Under a floating exchange rate regime, carefully illustrate and explain the process that will generate a new goods market

  Calculate the price of miller corporation bond

This bond pays a 5.3 percent coupon, has a YTM of 9.4 percent, and also has 13 years to maturity. Assume interest rates remain unchanged.

  Explain finding the required rate of return

Explain Finding the required rate of return and valuation of Preferred Stock

  Time value of money in making financial decisions

Kim has arranged a meeting with you and the head of manufacturing because she thinks you need to explain to him the time value of money.

  Types of foreign exchange risk companies

What are the types of foreign exchange risk companies face when they deal internationally? It would be great if you could explain in detail with examples if possible.

  Calculate the inflation adjustment for a 5-year loan

You have been assigned to estimate the interest rates that your company may have to pay when borrowing money in the near future. The following information is available.

  Give examples of the three distinct types of financial

Corporate managers work for the owners of the corporation. Consequently, they should make decisions that are in the interests of the owners, rather than their own. What strategies are available to shareholders to help ensure that managers are motivat..

  Types of risks faced by investors in bonds

In brief explain the types of risks faced by investors in domestic bonds? Also point out the additonal risks associated with nondomestic bonds. Describe the differece between Stocks and Bonds and which one Corporations use most to raise capital.

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