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Average return Variance Covariance with stock Covariance with bond Stock 0.148 Bond 0.06 0.014697 0.000155 0.000468 SCIP 0.152 0.160791 -0.002222 -0.000227

Average return Variance Covariance with stock Covariance with bond Stock 0.148 Bond 0.06 0.014697 0.000155 0.000468 SCIP 0.152 0.160791 -0.002222 -0.000227

Essentials Of Investments
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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list K mediums: a stock fund, a bond fund, and his own Sports and Casino Investment Plan (SCIP). The stock fund is a mutual fund investing in op traded stocks. The bond fund focuses on the bond market, which has a Table of Returns, Variances, and Covariances Average return Variance Covariance with stock Covariance with bond Stock Bond 0.148 0.06 0.014697 0.000155 0.000468 SCIP 0.152 0.160791 -0.002222 -0.000227 D - X
Transcribed Image Text:list K mediums: a stock fund, a bond fund, and his own Sports and Casino Investment Plan (SCIP). The stock fund is a mutual fund investing in op traded stocks. The bond fund focuses on the bond market, which has a Table of Returns, Variances, and Covariances Average return Variance Covariance with stock Covariance with bond Stock Bond 0.148 0.06 0.014697 0.000155 0.000468 SCIP 0.152 0.160791 -0.002222 -0.000227 D - X
The Hal Chase Investment Planning Agency is in business to help investors optimize their return from investment. Hal deals with three investment mediums: a stock fund, a bond fund, and his own Sports and Casino Investment Plan (SCIP). The stock fund is a mutual fund investing in openly traded stocks. The bond fund focuses on the bond market, which has a more stable, but lower, expected return. SCIP is a high-risk scheme, often resulting in heavy losses but occasionally coming through with spectacular gains. Average returns, their variances, and covariances are given in the accompanying table. Develop and solve a portfolio optimization model for this situation for a target return of 9% Complete the table of optimal allocations. Investment Proportion Stock Bond SCIP (Round to two decimal places as needed.) 4
Transcribed Image Text:The Hal Chase Investment Planning Agency is in business to help investors optimize their return from investment. Hal deals with three investment mediums: a stock fund, a bond fund, and his own Sports and Casino Investment Plan (SCIP). The stock fund is a mutual fund investing in openly traded stocks. The bond fund focuses on the bond market, which has a more stable, but lower, expected return. SCIP is a high-risk scheme, often resulting in heavy losses but occasionally coming through with spectacular gains. Average returns, their variances, and covariances are given in the accompanying table. Develop and solve a portfolio optimization model for this situation for a target return of 9% Complete the table of optimal allocations. Investment Proportion Stock Bond SCIP (Round to two decimal places as needed.) 4
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