QUESTION 14 An investor has decided to form a portfolio by putting 45% of his money into Google's stock and the remaining money into Apple's stock. The investor assumes that the expected returns will be 12% on Google and 20% on Apple, and that the standard deviations will be 0.10 and 0.20, respectively. What is the variance of returns on the portfolio, if the investor assumes that the two stocks' returns are perfectly positively correlated? O Var [Return on portfolio] = 0.024 O Var [Return on portfolio] = 0.042 O Var [Return on portfolio] = 0.003 O Var [Return on portfolio] = 0.004

QUESTION 14 An investor has decided to form a portfolio by putting 45% of his money into Google's stock and the remaining money into Apple's stock. The investor assumes that the expected returns will be 12% on Google and 20% on Apple, and that the standard deviations will be 0.10 and 0.20, respectively. What is the variance of returns on the portfolio, if the investor assumes that the two stocks' returns are perfectly positively correlated? O Var [Return on portfolio] = 0.024 O Var [Return on portfolio] = 0.042 O Var [Return on portfolio] = 0.003 O Var [Return on portfolio] = 0.004

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

See similar textbooks

Similar questions

Which statement is not correct?A. Spurious correlation can often be reduced by expressing X and Y in per capita terms.B. Autocorrelation is mainly a concern if we are using time - series data.C. Heteroscedastic residuals will have roughly the same variance for any value of X.D. Standardized residuals make it easy to identify outliers or instances of poor fit. ( don't hand writing solution)
In a study in pre-term infants, a group where breast feeding is difficult because the mother gets home before the baby does, you run a logistic regression model where the independent variable is the mother's age and the dependent variable is whether the infant was breast feeding at discharge from the hospital. If the log odds for breast feeding for a 20 year old mom was -3.654 + (20) * 0.157 = -0.514, compute the predicted probability for breast feeding for a 20 year old mom. 0.598 / (1+0.598) O 0.598 0.598 / (1 - 0.598) -0.514 / (1+0.598)
Q.4 Calculate the Variance and standard deviation from the following data Daily wages (Rs.) No. of workers 400-450 450-500 500-550 550-600 600-650 650-700 20 30 50 25 20 5
Q9 The explanatory variable in linear correlation/regression model is recorded on which of thesemeasurement scales: A. categorical B. ordinal C. quantitative D. none of the above
Example 10: P and Q two securities, with expected returns of 15% and 24% respectively, and standard deviation of 35% and 52% respectively. Calculate the standard deviation of a portfolio weighted equally between the two securities if their correlation is -0.9.
4. According to the information given below, compute the correlation coefficient and the covariance coefficient between stock A and stock B. Standard deviation of the portfolio (stock A and stock B) :0.37 Standard deviation of the stock A : 0.38 Standard deviation of the stock B :0.43 Weight for stock A : 0.60 Weight for stock B :0.40 NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS.
It is assumed that standardized test scores should be correlated with students' classroom performance. One would expect that students who consistently perform well in the classroom (on tests, quizzes, etc.) would also perform well on a standardized test scored from 0-100 (with 100 indicating high achievement). A teacher decides to examine this hypothesis. At the end of the academic year, she collects the following data for her (admittedly small) class: Standardized test score Overall GPA 56 1.8 1 73 2.6 2 78 2.9 3 83 2.9 4 85 3.0 5 rows x 2 columns What is your best guess for the expected GPA of a student who scored a 88 on the standardized test? number (rtol=0.01, atol=0.0001) Determine a 95% confidence interval for the expected GPA of a student who scored a 76 on the standardized test. Ib number (rtol=0.01, atol=0.0001) ub number (rtol=0.01, atol=0.0001)
If all the points in a scatter plot fall precisely on the regression line then the correlation is____ choose one perfect or negative or positive
For a data set of brain volumes (cm3) and IQ scores of twelve males, the linear correlation coefficient is found and the P-value is 0.242. a. The P-value indicates that the probability of a linear correlation coefficient that is at least as extreme is %
Consider the rate of return of stocks ABC and XYZ. Year 1 2 SAWN T 3 4 5 FABC 24% 10 17 4 1 ABC XYZ a. Calculate the arithmetic average return on these stocks over the sample period. (Round your answers to 2 decimal places.) rxyz 34% 12 18 1 -9 Arithmetic Average ABC XYZ % % b. Which stock has greater dispersion around the mean return?
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA= 2.0% + 0.40RM + eA RB = -1.8%+ 0.9RM + eB OM = 15%; R-squareA = 0.30; R-squareB = 0.22 What is the standard deviation of each stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Stock A Stock B Standard Deviation % %
A psychologist wants to determine if there is a linear relationship between the number of hours a person goes without sleep and the number of mistakes he/she makes on a simple test. The following data is recorded. a. Give a list of the residual values b. Look at the residual plot. Comment on what the residual plot tells you about the data . c. If appropriate , test the correlation using an alpha level of 0.05 . (Show all 6 steps!!!!)