Ebenezer Scrooge has Invested 55% of his money in share A and the remainder in share B. He assesses their prospects as follows: Expected return (%) Standard deviation (X) Correlation between returns 15 22 a. What are the expected return and standard deviation of returns on his portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return Standard deviation b. How would your answer change if the correlation coefficient were O or -0.40? (Do not round Intermedlate calculatlons. Enter your answers as a percent rounded to 2 decimal places.) Correlation Coefficient 0 Correlation Coefficient -0.40 Standard deviation c. Is Mr. Scrooge's portfollo better or worse than one Invested entirely in share A. or is it not possible to say? O Better O Worse O Not possible to say

Ebenezer Scrooge has Invested 55% of his money in share A and the remainder in share B. He assesses their prospects as follows: Expected return (%) Standard deviation (X) Correlation between returns 15 22 a. What are the expected return and standard deviation of returns on his portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected return Standard deviation b. How would your answer change if the correlation coefficient were O or -0.40? (Do not round Intermedlate calculatlons. Enter your answers as a percent rounded to 2 decimal places.) Correlation Coefficient 0 Correlation Coefficient -0.40 Standard deviation c. Is Mr. Scrooge's portfollo better or worse than one Invested entirely in share A. or is it not possible to say? O Better O Worse O Not possible to say

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

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Ebenezer Scrooge has Invested 55% of his money In share A and the remalnder in share B. He assesses their prospects as follows:
A
B
Expected return (%)
Standard deviation (X)
15
22
24
Correlation between returns
e.4
a. What are the expected return and standard devlation of returns on his portfolio? (Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places.)
Expected return
Standard deviation
%
b. How would your answer change if the correlation coefficlent were O or -0.40? (Do not round intermedlate calculatlons. Enter your
answers as a percent rounded to 2 decimal places.)
Correlation
Coefficient 0
Correlation
Coefficient -0.40
Standard deviation
c. Is Mr. Scrooge's portfolio better or worse than one Invested entrely In share A, or Is it not possible to say?
O Better
O Worse
O Not possible to say
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Ebenezer Scrooge has invested 55% of his money in share A and the remainder in share B. He assesses their prospects as follows: A B Expected return (%) 15 19 Standard deviation (%) 22 24 Correlation between returns 0.4 a. What are the expected return and standard deviation of returns on his portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. How would your answer change if the correlation coefficient were 0 or –0.40? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) c. Is Mr. Scrooge’s portfolio better or worse than one invested entirely in share A, or is it not possible to say? multiple choice Better Worse Not possible to say
Ebenezer Scrooge has invested 50% of his money in share A and the remainder in share B. He assesses their prospects as follows: A B Expected return (%) 15 21 Standard deviation (%) 22 24 Correlation between returns 0.6 a. What are the expected return and standard deviation of returns on his portfolio? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. How would your answer change if the correlation coefficient were 0 or –0.60? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Start with A-C and I will submit seperately for D! Thank you :)
Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .092, E(RB) = 152, đA = .362, and Og = .622. %3D Calculate the expected return of a portfolio that is composed of 37 percent A and 63 percent B when the correlation between the returns on A and B is .52. (Do not a-1. round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio that is composed of 37 percent A and 63 percent B when the correlation coefficient between the returns on A and B is .52. а-2. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio with the same portfolio weights as in h part (a) when the correlation coefficient between the returns on A and B is -.52. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a-1.…
a. Based on the following information, calculate the expected return and standard deviation for each of the following stocks. What are the covariance and correlation between the returns of the two stocks? Calculate the portfolio returm and portfolio standard deviation if you invest equally in each asset. Returns State of Economy Prob J K Recession 0.25 -0.02 0.034 Normal 0.6 0.138 0.062 Boom 0.15 0.218 0.092 b. A portfolio that combines the risk-free asset and the market portfolio has an expected return of percent and a standard deviation of 10 percent. The risk-free rate is 4 percent, and the Page 7 of 33 expected return on the market portfolio is 12 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a 45 corelation with the market portfolio and a standard deviation of 55 percent? C. Suppose the risk-free rate is 4.2 percent and the market portfolıo has an expected return of 10.9 mercent Tibemadkat normfeliobasiabiamance…
Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .092, E(RB) = 152, OA = .362, and og = .622. Calculate the expected return of a portfolio that is composed of 37 percent A and а-1. 63 percent B when the correlation between the returns on A and B is .52. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio that is composed of 37 percent A and 63 percent B when the correlation coefficient between the returns on A and B is .52. а-2. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio with the same portfolio weights as in part (a) when the correlation coefficient between the returns on A and B is -.52. (Do b. not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
kindly be as detailed as possible with the calculations. Preferably in excel.
If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) | Slope of the line %
Stocks A and B have the following probability distributions of expected future returns: Probability 0.1 0.2 0.5 0.1 0.1 A (5%) 2 Stock B 14 24 39 (40%) 0 24 30 42 a. Calculate the expected rate of return, Fa, for Stock B (FA-13.20%) Do not round intermediate calculations. Round your answer to two decimal places. b. Calculate the standard deviation of expected returns, da, for Stock A (de-21.99 %) Do not round intermediate calculations. Round your answer to two decimal places. Now calculate the coefficient of variation for Stock 8. Do not round intermediate calculations. Round your answer to two decimal places. Is it possible that most investors might regard Stock B as being less risky than Stock A? 1. If Stock Bis more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. 11. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky…
An investor has a portfolio of two assets A and B. The details are shown in the below table. Portfolio Details Asset Expectedreturn Standarddeviation Covariance (A, B) Expected Portfolio Return A 0.06 0.5 0.12 0.1 B 0.08 0.8 Which one of the following statements is NOT correct? a. The portfolio weight in asset A is -100%. b. The correlation of asset A and B’s returns is 0.3. c. The investor can benefit from a fall in the price of asset A. d. The variance of the portfolio is 2.33. e. The order of short selling is borrowing, buying, selling, and returning.
You own a portfolio that has $3,00o0 invested in Stock A and $4,100 invested in Stock B. Assume the expected returns on these stocks are 10 percent and 16 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

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