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 recommend if investment in individual stock is to be made? Justify answer using numerical calculations. Stock A Stock B Expected return 24% 35% Standard deviation 12% 18% Coefficient of correlation 0.65 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 recommend if investment in individual stock is to be made? Justify answer using numerical calculations. Stock A Stock B Expected return 24% 35% Standard deviation 12% 18% Coefficient of correlation 0.65 0.65
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
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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 recommend if investment in individual stock is to be made? Justify answer using numerical calculations.
|
Stock A |
Stock B |
Expected return |
24% |
35% |
Standard deviation |
12% |
18% |
Coefficient of correlation |
0.65 |
0.65 |
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