Common Stock C has a standard deviation of return of 10 percent. Common Stock D has a standard deviati return of 20 percent. The correlation coefficient between the two stocks is 0.5. If you invest 60 percent of y funds in stock C and 40 percent in Common stock D, what is the standard deviation of your portfolio? O 21.0 percent 14.8 percent 103 percent

Common Stock C has a standard deviation of return of 10 percent. Common Stock D has a standard deviati return of 20 percent. The correlation coefficient between the two stocks is 0.5. If you invest 60 percent of y funds in stock C and 40 percent in Common stock D, what is the standard deviation of your portfolio? O 21.0 percent 14.8 percent 103 percent

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

See similar textbooks

Similar questions

Stock X has a standard deviation of return of 25 percent. Stock Y has a standard deviation of return of 5 percent. The correlation coefficient between the two stocks is 0.5. If you invest 60 percent of your funds in Stock X and 40 percent in Stock Y, what is the standard deviation of your portfolio? Multiple Choice O 14.2 percent 24.9 percent 16.1 percent 18.7 percent
A portfolio is invested 22 percent in Stock G, 26 percent in Stock J, with remainder in Stock K. The expected returns on these stocks are 8.58 percent, 11.55 percent, and 13.05 percent, respectively. What is the portfolio's expected return? Answer to two decimals.
A portfolio is invested 24 percent in Stock G, 39 percent in Stock J, and 37 percent in Stock K. The expected returns on these stocks are 10.5 percent, 13 percent, and 18 percent, respectively. What is the portfolio's expected return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
9. A portfolio is composed of two stocks, Stock A and B. The standard deviation of return for Stock A is 50% and for Stock B it is 40%. If the covariance between the returns for Stock A and Stock B is -0.04, compute the correlation coefficient between the returns for Stock A and Stock B.
An investor plans to invest funds in the following stocks: Stock Beta Amount Invested A 1.39 $1,939.00 B 1.21 $2,818.00 C 0.75 $1,378.00 The risk-free rate is currently 3.00%, while the market risk premium is 6.00%. What is the beta of this portfolio?
You form a risky-risky portfolio composed of two stocks: A and B. Stock Expected Return (mean) Standard Deviation A B Weight in A 75% 18% 6% Correlation p=0.2 The mean and the standard deviation of the A-B portfolio with given weights were calculated for you: 20% Weight in B 25% 30% 15% 80% Expected Return (mean) Use the above information to answer questions 10 - 13. The TBill rate is 5%. The risk premium on the 75-in-A/25-in-B portfolio is: Its Sharpe Ratio is:_ #11 15.00% Std Deviation #13 % 23.5385% Consider the 75-in-A/25-in-B portfolio and combine it with the T-bill yielding 5%. Fill in the mean and the standard deviation of the new risky-riskless portfolio with given weights: Weight in 75A/25B Weight in T-bill Expected Return Standard Deviation #12 % #10 %
The risk-free rate is 6 percent and the expected market risk premium is 8 percent. What is the expected rate of return on a stock with a beta of 0.7? 5.6 percent 11.6 percent 15.8 percent 9.8 percent 14.0 percent
9
Below are standard deviations of four stocks: M, N, O and P. Stock M N O P Standard deviation 12% 20% 15% 30% 1. Which stock is the riskest? 2. Based on the risk-return tradeoff, which stock should provide the highest 3. If stock O provides a higher return than stock P, what should happen?
M6
Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard deviation of 25%. Portfolio P has $200,000 consisting of $100,000 invested in Stock A and $100,000 in Stock B. Which of the following statements is CORRECT? (Assume that the stocks are in equilibrium.) Select one: a. Portfolio P has a beta of 1.0. b. Stock A's returns are less highly correlated with the returns on most other stocks than are B's returns. c. Stock B has a higher required rate of return than Stock A. d. More information is needed to determine the portfolio's beta. e. Portfolio P has a standard deviation of 22.5%.
1. The following table presents the expected returns of three stocks and the risk free rate. в 4% Stock A 8% Expected return What is the expected return and risk on an equally weighted portfolio composed of these four assets? The standard deviation of stock A is 10% and the covariance between A and B equals 0.0045. The correlation matrix between A, B and C is: 14% 4% Correl B A 1 0.3 0.7 B 0.3 0.5 0.5 Combining stocks A and C in a portfolio in equal proportions will result in a variance of 1.95%. 0.7

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS