Asset X Asset Y E(R) = 8% E(R,) - 18% E(s.) = 7% E(s,) - 25% Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 allocation in Asset X is 0.65. Select one: O a. 11.5% and 15.17% O b. 11.5% and 11.71%
Asset X Asset Y E(R) = 8% E(R,) - 18% E(s.) = 7% E(s,) - 25% Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 allocation in Asset X is 0.65. Select one: O a. 11.5% and 15.17% O b. 11.5% and 11.71%
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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Question
2.
![Asset X
Asset Y
E(Rx) = 8%
E(Ry) = 18%
E(sx) = 7%
E(sy) = 25%
Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 and the
allocation in Asset X is 0.65.
Select one:
O a. 11.5% and 15.17%
O b. 11.5% and 11.71%
O c. 14.5% and 11.71%
O d. 11.5% and 7.58%
You purchased 5000 shares of common stock on margin for $8 per share. The initial margin is 60% and the stock pays no dividend.
Estimate your rate of return if you sell the stock at $10.50 per share. Ignore interest on margin.
Select one:
O a. 52.1%
O b. 31.3%
O c. 18.8%
O d. 78.1%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faee9c8c6-af60-4bd0-a431-4c2cd281727d%2F9e3f79cc-309a-4502-91e2-4f637d844798%2Fnr1wyb7_processed.png&w=3840&q=75)
Transcribed Image Text:Asset X
Asset Y
E(Rx) = 8%
E(Ry) = 18%
E(sx) = 7%
E(sy) = 25%
Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 and the
allocation in Asset X is 0.65.
Select one:
O a. 11.5% and 15.17%
O b. 11.5% and 11.71%
O c. 14.5% and 11.71%
O d. 11.5% and 7.58%
You purchased 5000 shares of common stock on margin for $8 per share. The initial margin is 60% and the stock pays no dividend.
Estimate your rate of return if you sell the stock at $10.50 per share. Ignore interest on margin.
Select one:
O a. 52.1%
O b. 31.3%
O c. 18.8%
O d. 78.1%
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