Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question:
a) You have just been appointed a portfolio manager of Malou investment. An investor has two assets available from which to form his desired portfolio. Asset X has an expected return of 4% and standard deviation of 9%. Asset Y has an expected return of 8% and standard deviation of 12%.
i) Assume that the returns of the two assets are perfectly positively correlated. If the investor wishes to place portfolio weight 1/3 on asset X and weight 2/3 on asset Y compute the expected return and standard deviation of the portfolio.
ii) Assume now that the two asset returns are perfectly negatively correlated. If the investor places portfolio weight of α on asset X, write down an expression for the variance of the portfolio. Demonstrate that, in this scenario, the investor can form a portfolio with zero variance and find the appropriate weights associated with this portfolio
b) ‘If correlation among security returns were perfect-if returns of all securities moved up and down together in perfect unison, diversification could do nothing to eliminate risk. The fact that security returns are highly correlated, but not perfectly correlated, implies that diversification can reduce risk but not eliminate it' Markovitz(1981).
c) Discuss the assumptions underlying the diversification theory.
Need assitance with a capital budgeting problem and NPV
determine the pay \back period for the project.
Finance There are various ways of making a payment for M&A. Cash, stock-swap and combination of both. The hybrid paying method is commonly used method for most of organisations
Duke Power Corporation has $500 million (face value) of zero-coupon bonds, which will provide 6% return to the bondholders and will mature after 10 years. The stockholders of the c
Two firms, Alpha and Beta, are in the same business and size and identical in all respects except the way in which they have financed their assets. If the economy does well in th
WACC calculation
The cost of capital for a firm can differ from the cost of capital for each of its businesses. When a firm has multiple businesses, it is important to use the cost of capital appro
An investor buys a French government, 10-year bond, paying annual coupon of 4.5%. Face value = 1000. The investor is unsure of his investment horizon and considers 5 horizons: 5, 6
How has the merger activity in the past decade affected the concentration of assets in the banking industry? A: Over the last decade, the number of commercial banks declined
It is an indicator used by traders to judge a security's long-term trend by comparing bars which comprise its closing, opening, high and low prices during a specific period of ti
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd