Stock Duke Energy Microsoft Wal-Mart Expected Standard Return Deviation 14% 6% 44% 23% 23% 14% O A. 10.2% B. 5.1% C. 8.5% D. 7.7% Correlation with Duke Energy Correlation with Microsoft -1.0 1.0 0.7 1.0 -1.0 0.0 The volatility of a portfolio that is equally invested in Duke Energy and Microsoft is closest to: Correlation with Wal-Mart 0.0 0.7 1.0
Stock Duke Energy Microsoft Wal-Mart Expected Standard Return Deviation 14% 6% 44% 23% 23% 14% O A. 10.2% B. 5.1% C. 8.5% D. 7.7% Correlation with Duke Energy Correlation with Microsoft -1.0 1.0 0.7 1.0 -1.0 0.0 The volatility of a portfolio that is equally invested in Duke Energy and Microsoft is closest to: Correlation with Wal-Mart 0.0 0.7 1.0
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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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Question
v.2
Transcribed Image Text:Correlation with
Microsoft
-1.0
44%
1.0
23%
0.7
The volatility of a portfolio that is equally invested in Duke Energy and Microsoft is closest to:
Stock
Duke Energy
Microsoft
Wal-Mart
Expected Standard
Return Deviation
14%
6%
23%
14%
A. 10.2%
B. 5.1%
O C. 8.5%
OD. 7.7%
Correlation with
Duke Energy
1.0
- 1.0
0.0
Correlation with
Wal-Mart
0.0
0.7
1.0
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