What is the approximate standard deviation of a portfolio

Assignment Help Finance Basics

Reference no: EM13616210

Here are some historical data on the risk characteristics of Dell and McDonald's:

Beta - Dell 1.33 / McDonald's 0.84

Yearly standard deviation of return(%) Dell 33.40 / McDonald's 15.2

Assume the standard deviation of the return on the market is 11%.

a.) The correlation coefficient of Dell's return versus McDonald's is 0.33. What is the standard deviation of a protfolio invested half in Dell and half in McDonald's?

b.) What is the standard deviation of a portfolio invested one-third in Dell, one-third in McDonald's, and one-third in risk-free Treasury bills?

c) What is the standard deviation if the portfolio is split evenly between Dell and McDonald's and is financed at 50% margin, that is, the investor puts up only 50% of the total amount and borrows the balance from the broker?

d.) What is the approximate standard deviation of a portfolio composed of 100 stocks with betas of 1.33 like Dell? How about 100 stocks like McDonald's?

Reference no: EM13616210

Questions Cloud

Predict one major change in the us financial environment : predict one major change in the u.s. financial environment that may likely occur within the next five years indicating

The damon family owns a large grape vineyard in western new : the damon family owns a large grape vineyard in western new york along lake erie. the grapevines must be sprayed at the

The mcgregor whisky company is proposing to market diet : the mcgregor whisky company is proposing to market diet scotch. the product will first be test-marketed for two years

The ceo of easy home sales inc would like to grow the : the ceo of easy home sales inc. would like to grow the company to 952000 in sales for next year. the finance officer

What is the approximate standard deviation of a portfolio : here are some historical data on the risk characteristics of dell and mcdonaldsbeta - dell 1.33 mcdonalds

Lester hollar is vice president for human resources for a : lester hollar is vice president for human resources for a large manufacturing company. in recent years he has noticed

A parallel plate capacitor has a capacitance of 67 microf : a parallel plate capacitor has a capacitance of 6.7 microf when filled with a dielectric. the area of each plate is 1.4

Turnbull corp had an ebit of 247 million innbspnbspthe last : turnbull corp. had an ebit of 247 million innbspnbspthe last fiscal year. its depreciation and amortization expenses

Two semicircular rods one with a 1000 mm radius r1 and the : two semicircular rods one with a 100.0 mm radius r1 and the other with a 180.0 mm radius r2 have a common center of

User Account

All Pages