Clearly describe the advantages of portfolio diversification. Suppose, the rates ofreturn on two stocks X and Y are normally distributed as x = N (10%, 9%) and y = N(10%, 16%). Assuming that the variance of the diversified portfolio (that has bothstocks X and Y) is V = 6.26 + 6c where c is the correlation between x and y, calculatethe maximum value of c beyond which portfolio diversification is not helpful.

Portfolio Diversification Portfolio Diversification is the process of investing your money in…

Answered: Clearly describe the advantages of…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Calculate the estimate of σε What is the estimated resting heart rate for someone who is a smoker (Smoke=1) and exercises 1 hour a day (Exercise=1)?
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In the method of regression, data sets are summarized in a useful form. The “independent” pieces of data are called inputs or regressors, whereas a quantity that is a function of the inputs, will be called a response. In an experiment, the effect of increasing storage temperature is related to the number of spoiled loaves of bread after 7 days. In this case, which variable will be the regressor?
Q5/ Use Linear Regression to fit the following data: X 1 2 4 5 6 Y 4 10 10 9 3
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Consider the following correlations -0.9 , -0.5 , -0.2 , 0 , 0.2 , 0.5 and 0.9. For each give the fraction of the variation in y that is explained by the least-squares regression of y on x.
The least-squares regression equation is y=784.6x+12,431 where y is the median income and x is the percentage of 25 years and older with at least a bachelor's degree in the region. The scatter diagram indicates a linear relation between the two variables with a correlation coefficient of 0.7962. In a particular region, 26.5 percent of adults 25 years and older have at least a bachelor's degree. The median income in this region is $29,889. Is this income higher or lower than what you would expect? Why?
Consider a two-dimensional scatterplot representing the relationship between two continuous variables. If the correlation coefficient is -1, then: a. All points lie in a straight line with a slope of -1. b. All points lie in a straight line with an unknown negative slope. c. All points do not lie in a straight line but the best fitting regression line has a slope of -1 d. There is a strong positive relationship between the two variables.
Seedlings of understory trees in mature tropical rainforests must survive and grow using intermittent flecks of sunlight. How does the length of exposure to these flecks of sunlight (fleck duration) affect growth? Researchers experimentally irradiated seedlings of the Southeast Asian rainforest tree with flecks of light of varying duration while maintaining the same total irradiance to all the seedlings. Below is the data. Fit a linear model to the data. Tree Mean Fleck (min) Relative growth rate (mm/mm/week 1 3.4 0.013 2 3.2 0.008 3 3 0.007 4 2.7 0.005 5 2.8 0.003 6 3.2 0.003 7 2.2 0.005 8 2.2 0.003 9 2.4 0 10 4.4 0.009 11 5.1 0.01 12 6.3 0.009 13 7.3 0.009 14 6 0.016 15 5.9 0.025 16 7.1 0.021 17 8.8 0.024 18 7.4 0.019 19 7.5 0.016 20 7.5 0.014 21 7.9 0.014 a)What is the rate of change in relative growth…
The table below shows the amounts of crude oil (in thousands of barrels per day) produced by a country and the amounts of crude oil (in thousands of barrels per day) imported by a country, for the last seven years. Construct and interpret a 98% prediction interval for the amount of crude oil imported by the this country when the amount of crude oil produced by the country is 5,464 thousand barrels per day. The equation of the regression line is y=-1.106x+15,759.462 Oil_produced,_x Oil_imported,_y5,816 9,3455,741 9,1245,660 9,6325,405 10,0095,155 10,1685,059 10,1055,015 10,055

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