b) You decide to buy 10,000 shares of each company. If the covariance between ABC and XYZ is 0, what is the expected return and standard deviation of your portfolio over the next year?
Q: • 1. Consider the following return on stocks, which as the same average return. Which stock is…
A: From given data: x¯=y¯=13.20 Return Stock A (x) (x-x¯)2 Return Stock B (y) (y-y¯)2 13 0.04 15…
Q: If the average low temperature of a winter month in Rochester, NY is 13∘13∘ and the standard…
A: Consider a variable, X: low temperature of a winter month in Rochester.To find the probability(in…
Q: Suppose that the annual rate of return for a common biotechnology stock is normally distributed with…
A:
Q: Assume that X and Y are two random variables. Suppose Y is exponential with mean 798. Suppose that,…
A: Given that Y follows Exponential with mean 798 And X | Y = y follows Exponential with mean y We have…
Q: ) Annual returns on the more than 5000 common stocks available to investors vary a lot. In a recent…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…
Q: You have just opened a new small hotel. Your fixed cost forecast is CHF 60,000 per month. A careful…
A: According our policy we can answer only first three subpart for remaining please repost the…
Q: An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected…
A: A BExpected return on stock A21%Expected return on stock…
Q: Suppose now that the mean µ and standard deviation σ of this distribution are both unknown.…
A: With the general assumption, the distribution of driving speed of drivers in US is considered to be…
Q: You own an investment which has an arithmetic mean return of 30% and a standard deviation of 15%.…
A:
Q: Serial correlation, also known as autocorrelation, describes the extent to which the result in one…
A: a) To construct a serial correlation , we use data pairs (x, y) Here , X : original data & y :…
Q: approximately normally distributed, find the probability that a randomly selected monthly payment…
A: The average monthly mortgage payment including principal and interest is P98200. If the standard…
Q: Suppose you are going to invest equal amounts in three stocks. The annual return from each stock is…
A: Hi! Thank you for the question, As per the honour code, we are allowed to answer three sub-parts at…
Q: What is the probability, p1, (assuming that the past pattern of variation continues) that the mean…
A:
Q: Illustrate this statement "Endogenous variables are correlated with the error term in the equation…
A: In the theory of statistics, the endogenous variable in a statistical model can be obtained by the…
Q: Suppose that the annual rate of return for a common biotechnology stock is normally distributed with…
A:
Q: 1. So ne followi Special Dis utlon: A. Binomial Distribution. (5 Points each) Evaluate the…
A:
Q: What is the Discrete Variable Standard Deviation for the following numbers:x = 0 and P(X = x) =…
A: Step 1:Given:xP(X=x)00.5110.1120.0930.1640.13 Step 2:The standard deviation σ of a discrete random…
Q: 5. Changes in the value of two particular cryptocurrencies are modelled as Normal distributions.…
A:
Q: Emergency Room Traffic. A variable is said to have an exponential distribution or to be…
A: Note: Hey there! Thank you for the question. As you have posted a question with several sub-parts,…
Q: The percent of fat calories that a person consumes each day is normally distributed with a mean of…
A: GivenMean(μ)=33standard deviation(σ)=10sample size(n)=9
Q: A portfolio with a beta of 0.7 with market and residual variance of 10, market variance being 196 ,…
A: Given information: The residual variance is σe2 = 10. The market variance is σM2 = 196. The beta…
Q: An experiment follows exponential distribution with mean 100. The probability that a value falls…
A: Obtain the value of x. The value of x is obtained below as follows:
Q: To construct a serial correlation, we simply use data pairs (x, y) where x = original buildup factor…
A:
Q: u can just answer no. 2
A: 2) Given w1 = 0.30 w2 = 0.70 E[R1] = 0.1 E[R2] = 0.2 Var[R1] = 0.25 Var[R2] = 0.45 Correlation ρ =…
Q: 2. a. Distinguish between correlation and regression analysis. [2]
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…
Q: 3. In the long run, anqual real returns on common stocks have been normally distributed with mean…
A: Note : "Since you have posted a question with multiple subparts, we will solve first three subparts…
Q: If the correlation between X and Y is r = -0.61 and if the standard deviations of X and Y…
A:
Q: Suppose that the annual rate of return for a common biotechnology stock is normally distributed with…
A: Answer Mean =7 standard deviation =5
Q: You have a portfolio of investment which consists of Stock A with a retum of A% and Stock B with a…
A:
Q: RISK (Standard deviation of portfolio return) 8 01 True 4 False I 1 10 20 30 NUMBER OF STOCKS IN…
A: Given: The data of few compamies are given we need to find certain question.
Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…
A: Please find the explanation below. Thank you
Q: If the standard deviation of returns on the market is 10 percent, and the beta of a well-…
A: To calculate the standard deviation of a well-diversified portfolio (𝜎𝑝) where the beta (𝛽𝑝) of…
Q: The following table shows the returns of two types of investments, stocks (x) and bonds (y), under…
A: In the question text , we have been clearly asked : expected return from bonds? What is the risk…
Q: Suppose that the annual rate of return for a common biotechnology stock is normally distributed with…
A: Given: Stock is normally distributed Mean=4.5% Standard deviation =4%
Q: The lifetime of certain electronic components is assumed to have an exponential distribution.…
A: Hello! As you have posted more than 3 sub parts, we are answering the first 3 sub-parts. In case…
Q: Serial correlation, also known as autocorrelation, describes the extent to which the result in one…
A: Correlation, in the finance and investment industries, is a statistic that measures the degree to…
Q: Scenario: Suppose a financial institution holds a well diversified $35,500,000 position in stocks.…
A: In this question, we are given a financial institution's diversified position in stocks, the…
Q: Find these probabilities of the monthly payment selected randomly. Enter the final answers as…
A: Let X denote the mortgage payments. Given that X follows N(mean = 982, SD = 180), then Z = (X -…
Q: You make an investment. Assume that annual returns are normally distributed with a mean return of…
A: Given Information: Mean μ=0.05 Standard deviation σ=0.20
Step by step
Solved in 3 steps
- Create different portfolios with weights (weightS&P, weightBond) where weightBond = 1 weightS&P. Let weightS&P equal 0%, 10%, 20%, 100%. Calculate the average return and the standard deviation for each of the eleven portfolios. Which of the following portfolio has the lowest risk (as measured by the standard deviation) ? The portfolio with 0% weight in the S&P500. The portfolio with 20% weight in the S&P500. The portfolio with 40% weight in the S&P500. The portfolio with 60% weight in the S&P500.Here are returns for two Shares, calculate the covariance (please remember excel is not acceptable to submit). Share Share ABC XYZ 2019 14.29% 5.00% 2020 -37.50% 61.90% 2021 50.00% -25.93% 13.66% Average 8.93%Serial correlation, also known as autocorrelation, describes the extent to which the result in one period of a time series is related to the result in the next period. A time series with high serial correlation is said to be very predictable from one period to the next. If the serial correlation is low (or near zero), the time series is considered to be much less predictable. For more information about serial correlation, see the book Ibbotson SBBI published by Morningstar. An Internet advertising agency is studying the number of "hits" on a certain web site during an advertising campaign. It is hoped that as the campaign progresses, the number of hits on the web site will also increase in a predictable way from one day to the next. For 10 days of the campaign, the number of hits × 105 is shown. Original Time Series Day 1 2 3 4 5 6 7 8 9 10 Hits × 105 1.3 3.5 4.4 7.2 6.8 8.3 9.0 11.3 13.1 14.7 Test ρ > 0 at the 1% level of significance. (Use 2 decimal places.) t
- Serial correlation, also known as autocorrelation, describes the extent to which the result in one period of a time series is related to the result in the next period. A time series with high serial correlation is said to be very predictable from one period to the next. If the serial correlation is low (or near zero), the time series is considered to be much less predictable. For more information about serial correlation, see the book Ibbotson SBBI published by Morningstar.A company that produces and markets video games wants to estimate the predictability of per capita consumer spending on video games in a particular country. For the most recent 7 years, the amount of annual spending per person per year is shown here. Original Time Series Year 1 2 3 4 5 6 7 $ per capita 32.27 34.06 37.83 43.32 44.62 49.67 51.83 (a) To construct a serial correlation, we use data pairs (x, y) where x = original data and y = original data shifted ahead by one time period. Construct the data…Andrew plans to retire in 30 years. He plans to invest part of his retirement funds in stocks, so he seeks out information on past returns. He learns that over the entire 20th century, the real (that is, adjusted for inflation) annual returns on U.S. common stocks had mean 8.7% and standard deviation 20.2%. The distribution of annual returns on common stocks is roughly symmetric, so the mean return over even a moderate number of years is close to Normal.What is the probability that the mean return will be less than 6%?Pax World Balanced is a highly respected, socially responsible mutual fund of stocks and bonds. Vanguard Balanced Index is another highly regarded fund that represents the entire U.S. stock and bond market (an index fund). The mean and standard deviation of annualized percent returns are shown below. The annualized mean and standard deviation are for a recent 10-years period.†. If x represents return and s represents risk, then explain why the coefficient of variation can be taken to represent risk per unit of return. From this point of view, which fund appears to be better? Explain. A. Since the CV is s/s2 we can say that the CV represents the risk per unit of return; the Pax fund appears to be better because the CV is smaller. B. Since the CV is s/s2 we can say that the CV represents the risk per unit of return; the Vanguard fund appears to be better because the CV is smaller. C. Since the CV is s/x we can say that the CV represents the risk per unit of return; the Pax fund…
- A population has a mean of u = 50 and a standard deviation of a = 10. If 3 points were added to every score in the population, what would be the new values for the mean and standard deviation? O The new mean is u = 47, and the new standard deviation is a = 13. The new mean is u = 47, and the standard deviation is still a = 10. O The new mean is u = 53, and the standard deviation is still o = 10. O The mean is still u = 50, and the new standard deviation is a = 13. If every score in the population were multiplied by 2, what would be the new values for the mean and standard deviation? The new mean is µ = 100, and the new standard deviation is still a = 10. The new mean is u = 52, and the new standard deviation is o = 20. The new mean is u = 100, and the new standard deviation is a = 20. The mean is still u = 50, and the new standard deviation is o = 20.If the average low temperature of a winter month in Rochester, NY is 18∘18∘ and the standard deviation is 3.4∘3.4∘, then according to Chebyshev's theorem, the percentage of average low temperatures in Rochester, NY between 12.56∘12.56∘ and 23.44∘23.44∘ is at least %.Consider the following returns and states of the economy for TZ.Com.: Economy Probability Return Weak 15% -9% Normal 50% 1% Strong 35% 6% What is the standard deviation of TZ's returns? SET YOUR CALCULATOR TO FOUR DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE %. FOR EXAMPLE, IF YOUR ANSWER IS 7.7011% ENTER IT AS 7.70.
- Andrew plans to retire in 40 years. He plans to invest part of his retirement funds in stocks, so he seeks out information on past returns. He learns that over the entire 20th century, the real (that is, adjusted for inflation) annual returns on U.S. common stocks had mean 8.7% and standard deviation 20.2%. The distribution of annual returns on common stocks is roughly symmetric, so the mean return over even a moderate number of years is close to Normal. What is the probability (assuming that past pattern of variation continues) that the mean annual return on common stocks over the next 40 years will exceed 10%? What is the probability that the mean return will be less than 5%?If the expected return on the market is 8% and the risk for your rate is 4%. What is the expected return for a stock with a beta equal to 2.00? 5. The changes in the values of two investment portfolios are modelled as Normal distributions. From day to day, the first investment portfolio changes in value with mean 2.6% and standard deviation 1.8%. From day to day, the second investment portfolio changes in value with mean 2.2% and standard deviation 2.5%. An investor is hoping for growth of at least 4%. Which portfolio is most likely to give growth of 4%?
