What is the expected return and volatility of a portfolio

Assignment Help Financial Management
Reference no: EM131834959

Suppose Ford Motor stock has an expected return of 19 % and a volatility of 38 %, and Molson Coors Brewing has an expected return of 11 % and a volatility of 32 % . If the two stocks are uncorrelated.

a. What is the expected return and volatility of a portfolio of 83 % Ford Motor stock and 17 % of Molson Coors Brewing stock?

The expected return of the portfolio is______ %. (Round to two decimal places.)

The volatility of the portfolio is ________ %. (Round to two decimal places.)

b. Given your answer to (a), is investing all of your money in Molson Coors stock an efficient portfolio of these two stocks? (Select the best choice below.)

A.Yes.

B. Cannot determine from the given information.

C. No.

c. Is investing all of your money in Ford Motor an efficient portfolio of these two stocks? (Select the best choice below.)

A.Yes.

B. No.

C. Cannot determine from the given information.

Reference no: EM131834959

Questions Cloud

How low can the price of ixnay shares fall : How low can the price of Ixnay shares fall before you receive a margin call?
Do movies mimic real life : Consumer behaviorists spend a good amount of time and effort to better understand what drives decision-making. Do movies mimic real life?
Which of these firms has higher equity cost of capital : which of these firms has a higher equity cost of capital, and how much higher is it?
Covariance between the stocks of microsoft and ford motor : what is the covariance between the stocks of Microsoft and Ford Motor? The covariance between the stocks of Microsoft and Ford Motor is.
What is the expected return and volatility of a portfolio : What is the expected return and volatility of a portfolio of 83 % Ford Motor stock and 17 % of Molson Coors Brewing stock?
Plus pay the bank its required rate of interest : What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest?
What is the value of a share of ego today : what is the value of a share of EGO today?
Annual rate implied from past and expected values : If Fatima expects to earn the same annual return after 2 year from today as the annual rate implied from the past and expected values given in the problem,
Compare stock insurer to mutual insurer : Compare a stock insurer to a mutual insurer with respect to each of the following. Parties who legally own the company

Reviews

Write a Review

Financial Management Questions & Answers

  What will be the percent increase in net income

Last year, Sally’s Spaniel Salon had total revenues of $130,000 and total expenses of $98,000. Next year, revenues are projected to increase by 7%, and expenses are expected to increase by 8%. What will be the (approximate) percent increase in Net In..

  Find the present value of the dividend stream

Find the expected dividend for each of the next 3 years. find the present value of the dividend stream; that is, calculate the PVs of D1, D2,

  How much of new investment must be financed by common equity

To maintain the present capital structure, how much of the new investment must be financed by common equity?

  How many years are there until the bond matures

How many years are there until the bond matures?

  Using the table of returns and probabilities

Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment. Usi..

  John possible liability under the theft act

Discuss John's possible liability under the Theft Act.

  Firms hedge against exchange rate risk

Futures contracts may help firms hedge against exchange rate risk by

  Assuming effective annual interest at rate

Payments of 200 due July 1, 2012 and 300 due July 1, 2014 have the same value on July 1, 2009 as a payment of 100 made on July 1, 2009 along with a payment made on July 1, 2013. Find the payment needed July 1, 2013 assuming effective annual interest ..

  The divorce settlement stipulated

Patricia and Joe Payne are divorced. The divorce settlement stipulated that Joe pay $500 a month for their daughter Suzanne until she turns 18 in 4 years. Interest is 12% a year. How much must Joe set aside today to meet the settlement?

  Calculate the degree of financial leverage

McDonald Company shows the following condensed income statement information for the current year:- Calculate the degree of financial leverage.

  Percentage of debt in market value capital structue

Calculate the percentage of debt in HSB's market value capital structure. Calculate the DCF (dividend growth model) required return on HSB common stock.

  Compute basic earnings per share if after-tax earnings

Compute basic earnings per share if after-tax earnings are $730,000.

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