What is the expected return of the stock a and b portfolio

Reference no: EM13299420

Stocks A and B have a correlation coefficient of 0.8. The stocks expected returns and standard deviations are in the table below. A portfolio consisting of 40% of stock A and 60% of stock B is created.

Stock Expected Return Standard Deviation
A 20% 25%
B 15% 19%

i. What is the expected return of the stock A and B portfolio?
ii. What is the standard deviation of the stock A and B portfolio?
iii. What percentage of stock A should be invested to obtain the minimum risk portfolio that contains stock A and B?

Reference no: EM13299420

Questions Cloud

What is the current value of a share of seneca common stock : What is the current value of a share of Seneca common stock to an investor who requires a 14 percent rate of return?

Define what was the unknown volume : An unknown volume of water at 18.2 degrees Celsius is added to 21.6 mL of water at 35.0 degrees Celsius. If the final temperature is 23.5 degrees Celsius, what was the unknown volume

Determine the electrical potential energy of the pair : Two charged particles, Q1 = +4.50 nC and Q2 = -2.70 nC, are separated by 30.0 cm. What is the electrical potential energy of the pair

Which of the following statements is most accurate : Using the free cash flow method of valuation, an analyst determines the value of Company A's stock to be $10 and the value of Company B's stock to be $14. Based on this information, which of the following statements is most accurate?

What is the expected return of the stock a and b portfolio : Stocks A and B have a correlation coefficient of 0.8. The stocks expected returns and standard deviations are in the table below. A portfolio consisting of 40% of stock A and 60% of stock B is created.

Define what is the final temperature inside the calorimeter : One piece of copper jewelry at 108 degrees Celsius has exactly twice the mass of another piece, which is at 44 degrees Celsius. Both pieces are placed inside a calorimeter whose heat capacity is negligible. What is the final temperature inside the..

Explain a calorimeter whose heat capacity is negligibe : One piece of copper jewelry at 108 degrees Celsius has exactly twice the mass of another piece, which is at 44 degrees Celsius. Both pieces are placed inside a calorimeter whose heat capacity is negligible.

Would you describe such an acquisition market as efficient : Suppose that stock prices of target firms in acquisitions responded to acquisition announcements over a three day period rather than almost instantly.

Explain solution of the weak base ammonia nh3 : What is the pH of a 0.15 M solution of the weak base ammonia (NH3). The Ka of the conjugate acid is (NH4) is 5.6e-10.

User Account

All Pages