From the following information, calculate covariance between stocks A and B and expected return and risk of a portfolio in which A and B are equally weighted. Which stock would be best recommend if investment in individual stock is to be made? Justify the answer using numerical calculations. Stock A Stock B Expected return 24% 35% Standard deviation 12% 18% Coefficient of correlation 0.65
From the following information, calculate covariance between stocks A and B and expected return and risk of a portfolio in which A and B are equally weighted. Which stock would be best recommend if investment in individual stock is to be made? Justify the answer using numerical calculations. Stock A Stock B Expected return 24% 35% Standard deviation 12% 18% Coefficient of correlation 0.65
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 6P
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From the following information, calculate covariance between stocks A and B and expected return and risk of a portfolio in which A and B are equally weighted.
Which stock would be best recommend if investment in individual stock is to be made? Justify the answer using numerical calculations.
|
Stock A |
Stock B |
Expected return |
24% |
35% |
Standard deviation |
12% |
18% |
Coefficient of correlation |
0.65 |
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