What should be the return statistics of the second stock

Reference no: EM131477238

Question: Your client asks you to create a two-asset portfolio having an expected return of 15% and return standard deviation of 12%. The client specifies that the portfolio include 60% of the stock ‘Merlyn' (named for her beloved mother...) which has expected return is 13% and has a standard deviation of 10%.

a. What should be the return statistics of the second stock you'll combine in this portfolio, assuming the stocks have zero correlation?

b. What should be the return statistics of the second stock you'll combine in this portfolio, assuming the stocks have covariance of 0.01?

Reference no: EM131477238

Questions Cloud

Keith fitzpatrick-matthews debunks : Briefly explain how Keith Fitzpatrick-Matthews debunks ONE of the supposed "Amazing Discoveries" from the Spirit Science listicle.

Fifteenth and early sixteenth centuries : How did In the fifteenth and early sixteenth centuries, the changes in global society that were chiefly driven by merchants

Why fat servers rather than fat clients should be used : Why fat servers, rather than fat clients, should be used in your scenario. Compare pros of Intranets to those of Internet from an organizational perspective.

How do donnelly arguments reflect some : Where was Atlantis located, when did it exist, and how did it come to an end, according to Donnelly? What is the main historical source for Atlantis?

What should be the return statistics of the second stock : Your client asks you to create a two-asset portfolio having an expected return of 15% and return standard deviation of 12%.

Use a three step binomial model : The spot price of a stock is $50 and the futures contract is on 100 shares. Use a 3-step binomial model.

What will be the weightsof a minimum variance portfolio : What will be the weights, the expected return, the variance, and the standard deviation of a minimum variance portfolio combining the stocks below.

Generate the greater after-tax yield : which investment (without considering any effect of state and local taxes) would generate the greater after-tax yield?

Discuss about the nursing informatics : Explain the scope of the problem using both anecdotal and evidentiary information to "build your case"

User Account

All Pages