An investor has the following expectations on the performance of Stock X and Stock Y:ProbabilityScenarioReturns (%)Stock XStock Y0.20Good50%14%0.50Average30%6%0.30Bad-10%6%Estimate the portfolio return with an allocation of 70:30 (X:Y) in the two stocks.Select one:O a. 11.92%ОБ. 14.80%O. 32.00%O d. 17.68%Following Question 18, estimate the correlation coefficient between the two stocks.Select one:O a. 0.63оъ. 0.46O c. 0.84O d. 0.76Following Question 18 and 19, estimate the portfolio standard deviation with an allocation of 40:60 in these two stocks.Select one:O a. 9.6%о ь. 10.8%O c. 10.2%O d. 9.2%

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Answered: An investor has the following…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor's portfolio consists of the following stocks: B. C. Required: A. Stock NCB BNS JBG GRACE LASD HBN % of Portfolio Beta 35 1.05 15 0.45 10 0.9 10 0.95 23 d 1.6 7 $0.7 Expected Return 21% * 10% 15% 18% 25% 9% d The current risk free rate of return is 6.5% and the expected return on the market portfolio is f 16%. to sastava 128 hodan) ditane H puo abuso gurILA be HOME D q now to Compute the expected return of the portfolio and the portfolio beta. Tynaquros ort vd bomenstem of dou Compute the required rate of return for the NCB stock using the Capital Asset Pricing Model (CAPM). bell (0 simo 15710 zib sh Explain the difference between diversifiable and non-diversifiable risks using examples.
Question 2 You have the following information: A B C Market Alpha 1% 2% 3% 0% Beta 2 1.5 0.5 1 Res. 1.00% 2.00% 0.90% 0.00% Variance Std.Dev 9% 15% 12% 8% Excess 6% Return What is the alpha of the active portfolio? Note: Round to 3 decimals. The margin of error here is +/-0.01. D -2% 2 0.85% 11%
Consider the following information: State of Probability of Economy State of Economy Boom Bust .58 .42 Rate of Return if State Occurs Variance Stock A .07 .16 Stock B 15 .06 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return 12.87% % Stock C 33 -.06 b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., 32.161616.) 1.29% *
dont answer by pen paper
10:06 9. Given: EXR) .10 E(R) .15 0₁.03 0₂.05 Calculate the expected returns and expected standard deviations of a two-stock portfolio in which Stock I has a weight of 60 percent under the following conditions: a. 1.00 b.2-0.75 c. P₁2=0.25 d.n=0.00 c. P₁2=-0.25 f.r=-0.75 872-1.00 a. w-1.00 b. w₁=0.75 c. w=0.50 d. w₁ -0.25 c. w;0.05 Expert Q&A Calculate the expected returns and expected standard deviations of a two-stock portfolio having a correlation coefficient of 0.70 under the following conditions: 10. Given: E(R₁) 0.12 E(R₂) = 0.16 .ll? G₁-0.04 0₂-0.06 Plot the results on a return-risk graph. Without calculations, draw what a curve with varying weights would look like if the correlation coefficient had been 0.00, or if it had been -0.70. Done
Rate of Return If State Occurs State of Probability of State of Economy Stock A Stock B Economy Stock C Вoom .62 .10 .19 .37 Bust .38 .16 .08 -.04 What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the variance of a portfolio invested 16 percent each in A and B and 68 percent in C? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) % Expected return Variance
K -61 =1 2 N (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Probability 0.25 0.50 0.25 Common Stock A Probability 0.25 0.25 0.25 0.25 (Click on the icon in order to copy its contents into a spreadsheet.) @ 2 a. Given the information in the table, the expected rate of return for stock A is 16.25 %. (Round to two decimal places.) The standard deviation of stock A is %. (Round to two decimal places.) b. The expected rate of return for stock B is%. (Round to two decimal places.) The standard deviation for stock B is%. (Round to two decimal places.) c. Based on the risk (as measured by the standard deviation) and return of each stock, which investment is better? (Select the best choice below.) 30² F2 W OA. Stock A is better because it has a higher expected rate of return with less risk B. Stock B is…
2. Consider the following expected returns, volatilities, and correlations: Expected Standard Stock Return Deviation Correlation with Vital Correlation with Mital Correlation with Pital Vital 14% 6% 1.0 -1.0 0.0 Mital 44% 24% -1.0 1.0 0.7 Pital 23% 14% 0.0 0.7 1.0 a. Imagine a portfolio comprising solely of Vital and Mital. What portion of should be allocated to Vital stock to ensure a risk-free investment? your investment b. What is the portfolio's volatility when holding a $10,000 long position in Pital and a $2000 short position in Mital? wwwww c. In a market, there are two securities, Artis and Brotis. Currently, the price of Artis stands at £50. Looking ahead, the price of Artis next year will be £40 during a recession, £55 in normal economic times, and £60 in an expanding economy. The probabilities associated with recession, normal times, and expansion are 0.1, 0.8, and 0.1, respectively. Artis does not pay dividends and has a correlation of 0.8 with the market. On the other…
Start with A-C and I will submit seperately for D! Thank you :)
Parts A-C have already been answered, looking for answer D.
only typed answer Stock A's stock has a beta of 1.30, and its required return is 15.25%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 11.15% b. 11.18% c. 11.21% d. 11.24% e. 11.27%
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