The stock he shorted and original portfolio

Assignment Help Financial Management
Reference no: EM131952889

Fred holds a portfolio with a 30% volatility. He decides to short sell a small amount of stock with a 40% volatility and use the proceeds to invest more in his portfolio. If this transaction reduces the risk of his portfolio, what is the minimum possible correlation between the stock he shorted and his original portfolio?

Reference no: EM131952889

Questions Cloud

Difference in spot-one-year-forward foreign-exchange rates : What was the approximate percent difference between the spot and one-year-forward foreign-exchange rates of these two countries
Identify the four categories of ratios : Identify the four categories of ratios used to evaluate health care organizations.
What is the yield on one of these bonds : What is the yield on one of these bonds? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average.
What is the value of the annuity in seven years : What is the value of the annuity today? What is the value of the annuity in 7 years?
The stock he shorted and original portfolio : If this transaction reduces the risk of his portfolio, what is the minimum possible correlation between the stock he shorted and his original portfolio?
How much will you be able to withdraw per month to live off : If you expect to live 35 years past retirement, how much will you be able to withdraw per month to live off of?
Expected one year capital gain yield on the bonds : What is the expected one year capital gain yield on the bonds of seattle seafood company?
Investors receive varies based on market conditions : Coupon payments are fixed, but the percentage return that investors receive varies based on the market conditions.
Exact forms for UIP and international Fisher effect : The NPV for the project using the exact forms for UIP and the international Fisher effect is $.

Reviews

Write a Review

Financial Management Questions & Answers

  One with inflow followed by series of outflows

Assume a nonnormal project (one with an inflow followed by a series of outflows) is considered to have above-average risk.

  Retirement account makes deposit at beginning of year

Joans invest $2,000 in retirement account makes deposit at beginning of year. How much will each have in his or her account in 20 years?

  Not a current asset

Which of the following is NOT a current asset? a. Inventory b. Accounts receivable c. Cash d. A rent deposit expected to be received back in 3 months when a lease expires. e. All of these are current assets.

  Semi-annual coupon bond with coupon rate

Suppose that you buy a semi-annual coupon bond with coupon rate of 10%; the market price of $1,120, and the time to maturity of 17 years. Seven years from now, the YTM on your bond is expected to decline by 2%, and you plan to sell. What is the holdi..

  What is the SR for the portfolio

What is the SR for the portfolio P? What is the change in SR if the coefficient of correlation is changed to -0.20? Assume TB rate is 5%.

  Significant transactions with related parties

The entity being reported on had significant transactions with related parties. The auditor wishes to issue an otherwise unmodified report.

  How does the price of financial futures contract change

How does the price of a financial futures contract change as the market price of the security it represents changes? Why?

  Generated funds would be used to replace worn-out equipment

Depreciation-generated funds would be used to replace worn-out equipment, so they would not be available to TransWorld's shareholders.

  What is the crossover rate

Project A has cash flows of -$50,000, $29,400, $27,200, and $24,500 for years 0 to 3, respectively. Project B has an initial cost of $50,000 and an annual cash inflow of $26,500 for three years. These are mutually exclusive projects. What is the cros..

  Compound rate of return on this investment before tax

What was his average annual compound rate of return on this investment before tax?

  Making retirement plans

Suppose that you are 28 years old, and making retirement plans. You intend to contribute a certain amount per month until the age of 65 and then stop contributi

  Determine the total amount of their itemized deductions

Using the Andersons’ information, determine the total amount of their itemized deductions. Assume that they’ll use the filing status of married filing jointly,

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