Solution-What is the expected return and standard deviation

What is the expected return and standard deviation

Reference no: EM133182809

Question - A risky portfolio contains three risky stocks listed below. The standard deviation of the risky portfolio is 30%, and the risk-free rate is 5%. The market expected return is 12% and market standard deviation is 20%.

	Weight in Portfolio	Expected Return	Std. Dev.
Stock A	50%	15%	40%
Stock B	25%	20%	40%
Stock C	25%	8%

Required -

1. Suppose you choose to invest 60% of a portfolio in the risky portfolio and the rest in a risk-free money market. What is the expected return and standard deviation of your complete portfolio?

2. You form another portfolio by combining stocks A and B with equal weight. The standard deviation of the portfolio is 35%, what must be the correlation coefficient between the two stocks?

Reference no: EM133182809

Questions Cloud

Entry strategies of multinational organizations : Compare and contrast the entry strategies of multinational organizations in different countries of Latin America? Describe for each of the countries as per the

Calculate the total cost based on the eoq : The company currently makes 72,000,000 packs of candies annually that uses fruit nectar. Calculate the total cost based on the EOQ

Netflix goes to bollywood : This assignment is based on the case "Netflix Goes to Bollywood." It will require you to think critically about Netflix's business, corporate and international

Organizing a training department : What are some considerations that must be evaluated and implemented when organizing a training department? Describe the types of training activities that are ap

What is the expected return and standard deviation : Suppose you choose to invest 60% of a portfolio in the risky portfolio and the rest in a risk-free money market. What is expected return and standard deviation

Reading of leadership development-personal effectiveness : Please review again the reading of Leadership Development & Personal effectiveness, pg. 4-53

Make the journal entry record related to this loan : Make the journal entry (if any) that the Sherlock Holmes Detective Service would record related to this loan on December 31, 2018

Evaluate the effectiveness of a strategic plan : Keeping in mind the aspects of planning, leading, organizing, and controlling, explain how would evaluate the effectiveness of a strategic plan the most importa

External recruiting methods : Next, present to senior management on how you will source, recruit, and attract candidates for this position. In your presentation, you must include the follow

User Account

All Pages

What is the expected return and standard deviation

Reference no: EM133182809

Reference no: EM133182809

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

What type of disclosure or accounting do you believe

What is the unit cost

What is comprehensive income

Define the objectives of external financial reporting

Estimate the amount of inventory OMG lost in the fire

Preapre a journal entry for teal company

What is balance in the bad debt expense account at year end

What is the most sales price he can afford

Calculate interest expense for the year on the bonds

What amount should row report as retained earnings

Calculate the amount of the right-of-use asset and lease

Prepare the statement of financial position

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT