Question 3: You are an active investor in the securities market and you have established an investment portfolio of two stock A and B five years ago. Required: a) If your portfolio has provided you with returns of 9.7%, -6.2%, 12.1%, 11.5% and 13.3% over the past five years, respectively. Calculate the geometric average return of the portfolio for this period? b) AssumethatexpectedreturnofthestockAinyourportfoliois14.6%.The risk premium on the stocks of the same industry are 5.8%, the risk-free rate of return is 5.9% and the inflation rate was 2.7. Calculate beta of this stock using Capital Asset Pricing Model (CAPM)? D) Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio? AB 12.5% 18.5% Expected return Standard Deviation of return Correlation of coefficient (p) 0.4 15% 20%
Question 3: You are an active investor in the securities market and you have established an investment portfolio of two stock A and B five years ago. Required:
a) If your portfolio has provided you with returns of 9.7%, -6.2%, 12.1%, 11.5% and 13.3% over the past five years, respectively. Calculate the geometric average return of the portfolio for this period?
b) AssumethatexpectedreturnofthestockAinyourportfoliois14.6%.The risk premium on the stocks of the same industry are 5.8%, the risk-free
D) Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio?
AB 12.5% 18.5%
Expected return
Standard Deviation of return Correlation of coefficient (p) 0.4
15% 20%
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