Please show all work and formulas in excel please! The Table for the problem is attached. Table below shows the historical returns for Companies A, B and C If one investor has a portfolio consisting of 50% Company A and 50% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%? If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8% What would happen to the portfolio risk if more and more randomly selected stocks were added?
Please show all work and formulas in excel please! The Table for the problem is attached. Table below shows the historical returns for Companies A, B and C If one investor has a portfolio consisting of 50% Company A and 50% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%? If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8% What would happen to the portfolio risk if more and more randomly selected stocks were added?
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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Please show all work and formulas in excel please! The Table for the problem is attached.
Table below shows the historical returns for Companies A, B and C
- If one investor has a portfolio consisting of 50% Company A and 50% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%?
- If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%
- What would happen to the portfolio risk if more and more randomly selected stocks were added?
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Step 1: Define- Expected Return and Standard Deviation:
VIEWStep 2: Calculate Average Return, Standard Deviation and Correlation of Individual Companies:
VIEWStep 3: 1. Calculate Expected Return , Standard Deviation and Sharpe Ratio of Portfolio:
VIEWStep 4: 2.Calculate Expected Return , Standard Deviation and Sharpe Ratio of Portfolio:
VIEWStep 5: 3. Explanation of Part-3:
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