What is the standard deviation of portfolio

Assignment Help Financial Management

Reference no: EM131316542

Stock A's expected return and standard deviation are E[RA] = A = 6% and A = 12%, while stock B's expected return and standard deviation are E[RB] = B = 10% and B = 20%.

(a) How would you construct a portfolio with expected return of 8% using stock A and stock B? What is the standard deviation of the portfolio? (Assume AB = 0:4)

(b) How would you construct a portfolio with standard deviation of 15% using stock A and stock B? What is the expected return of the portfolio? (Assume AB = 0:4)

Reference no: EM131316542

Questions Cloud

What will cash flows for this project be : KADS, Inc., has spent $370,000 on research to develop a new computer game. The firm is planning to spend $170,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $47..

Use the geometric average growth rate : Suppose Stark Ltd. just issued a dividend of $1.96 per share on its common stock. The company paid dividends of $1.60, $1.70, $1.77, and $1.88 per share in the last four years. If the stock currently sells for $70, what is your best estimate of the c..

Match intended audience and purpose for situation and tone : Review the Strayer University Website to find an opportunity to write a FAQ that does not exist but would be useful to an intended audience. Match the intended audience and purpose for situation and tone

What type of network model and topology would you recommend : What type of network architecture/model and topology would you recommend, and why? The charity is expected to receive a substantial donation in the near future. This donation will enable it to double the size of its network to 14 PCs.

What is the standard deviation of portfolio : Stock A's expected return and standard deviation are E[RA] = A = 6% and A = 12%, while stock B's expected return and standard deviation are E[RB] = B = 10% and B = 20%. How would you construct a portfolio with expected return of 8% using stock A and ..

Exploration to the moon and mars outweigh the risks : Next, give your opinion on whether or not the benefits of space exploration to the Moon and Mars outweigh the risks and costs of exposing such travelers to gamma rays above Earth's atmosphere. Provide a rationale for your response

Make sure to clarify the intercept and the slope : The expected return on the market portfolio mu m = E[Rm] = 15%, the standard deviation is sigma m = 25% and the risk-free rate is Rf = 5%. Suppose the CAPM holds. Draw on a diagram with the Capital Market Line (CML) derived from the above data. Make ..

Contact list project where the user enters first name : Contact list project where The user enters first name, last name, street address, email address, phone number and notes. Alternate course: If the user leaves one or more of the fields blank, the person will still.

Creating an effective marketing mix : Consider the need for a marketing mix in a marketing strategy. What would be the danger in too little or too much of a focus on one of the P's?

User Account

All Pages