What circumstance would the risk of two-asset portfolio

Assignment Help Financial Management
Reference no: EM131456250

Under what circumstance would the risk of a two-asset portfolio not be reduced at all?

a) when the correlation coefficient of the two assets' returns is between 0 and +1.

b) when the correlation coefficient of the two assets' returns is -1.

c) when the correlation coefficient of the two assets' returns is greater than +1.

d) when the correlation coefficient of the two assets' returns is +1.

e) when the correlation coefficient of the two assets' returns is 0.

Reference no: EM131456250

Questions Cloud

Equity portfolio for the multi-manager wilstead pension fund : equity portfolio for the multi-manager Wilstead Pension Fund. Will the limitations of 20 stocks likely increase or decrease the risk of the portfolio?
Why does CAPM imply that investors should trade very rarely : Why doe sthe CAPM imply that investors should trade very rarely?
What is this portfolios total risk : what is this portfolio’s total risk if these two assets are uncorrelated (independent)?
What is the cash conversion cycle : Twenty years ago there was little in the way of electronic funds transfers and payments. What is the cash conversion cycle?
What circumstance would the risk of two-asset portfolio : Under what circumstance would the risk of a two-asset portfolio not be reduced at all?
Find the price of a call using put-call parity : FIND: Price of a Call using Put-Call Parity.
Concepts of systematic risk and firm-specific risk : Contrast the concepts of systematic risk and firm-specific risk, and give an example of each type of risk;
The required return on common stock be : The firm will experience supernormal growth of 30% in next 3 years and then return to its constant growth rate of 6%. If the required return on common stock be.
Default premium between these two levels of bond ratings : what is the implied default premium between these two levels of bond ratings?

Reviews

Write a Review

Financial Management Questions & Answers

  Different capital structure-levered plan and all-equity plan

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 735,000 shares of stock outstanding. What is the break-even EBIT?

  Use currency futures to hedge its exchange risk

Supposed that Volkswagen plans to import 250 Golfs from its plant in Dresden, Germany, to rebadge them as "CTS" and sell them in the US via their dealerships. Explain how Volkswagen can use currency futures to hedge its exchange risk. How many future..

  What is effective interest rate on lending arrangement

Come and Go Bank offers your firm a discount interest loan with an interest rate of 10 percent for up to $19 million, and in addition requires you to maintain a 3 percent compensating balance against the face amount borrowed. What is the effective an..

  What is the firms expected rate of return

ABC Inc.'s stock has a 50% chance of producing a 21% return, a 30% chance of producing a 10% return, and a 20% chance of producing a -30% return. What is the firm's expected rate of return? 1. 9.72% 2. 9.88% 3. 7.82% 4. 7.50% 5. 8.37%

  What is depreciation and amortization

Net income is 1,012. Interest expense totals 266, while EBITDA is 2,584. If taxes are 633, what is depreciation and amortization (DA) ? Beginning equity for a company is 185, and ending equity is 210. The company sold stock in the amount of 127, and ..

  Weighted average cost of capital calculation

What does it cost a company to issue equity as opposed to debt? What factors influence the cost of equity? How does one value it in the weighted average cost of capital calculation?

  What is the arbitrage profit in one year

Suppose that the annual interest rate is 1.5% in the US and 3% in Germany, the spot exchange rate is $1.57/€ and the forward exchange rate with one-year maturity is $1.58 /€. Assume that an arbitrator can borrow up to $1,000,000 with €625,000. If an ..

  Part of the cost of capital

Which of the following is NOT part of the cost of capital?

  Managing is expecting an inflow of funds

Suppose that the pension fund you are managing is expecting an inflow of funds of $100 million next year and you want to make sure that you will earn the current interest rate of 8% when you invest the incoming funds in long-term bonds. How would you..

  Which will be financed with accounts payable

A proposed project requires an initial investment of $8,500 in current assets, 75% of which will be financed with accounts payable. The project will have:

  Should the preferred stock include a call provision

In the summer of 2015, the Hadaway Company was planing to finance an expansion with a convertible security. It considered a convertible debenture but feared the burden of fixed interest charges if the common stock price did not rise enough to make co..

  Profile of company celcom the length

Write the profile of company "celcom" the length should be about 2 pages (should include the management information system the company use)

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