-stock has mean of 10% and stdev of 15%; - bond has mean of 6% and stdev of 10%; -correlation b/w stock and bond of -0.4; -Risk free rate for cash lending and borrowing is at 2%. What is the mean and stdev of a portfolio of that is 90% in stock and 60% in bond, and the rest in cash (borrowing at cash rate of 2% if needed
-stock has mean of 10% and stdev of 15%; - bond has mean of 6% and stdev of 10%; -correlation b/w stock and bond of -0.4; -Risk free rate for cash lending and borrowing is at 2%. What is the mean and stdev of a portfolio of that is 90% in stock and 60% in bond, and the rest in cash (borrowing at cash rate of 2% if needed
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
Related questions
Question
-stock has mean of 10% and stdev of 15%;
- bond has mean of 6% and stdev of 10%;
-correlation b/w stock and bond of -0.4;
-Risk free rate for cash lending and borrowing is at 2%.
What is the mean and stdev of a portfolio of that is 90% in stock and 60% in bond, and the rest in cash (borrowing at cash rate of 2% if needed
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education