Suppose Johnson & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown here, with a correlation of 20%. Calculate (a) the expected return and (b) the volatility (standa deviation) of a portfolio that consists of a long position of $10,000 in Johnson & Johnson and a short position of $1,500 in Walgreens. a. Calculate the expected return. The expected return is %. (Round to two decimal place.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Expected Return 7.2% 10.7% Johnson & Johnson Walgreens Boots Alliance Standard Deviation 14.8% 21.3% - X
Suppose Johnson & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown here, with a correlation of 20%. Calculate (a) the expected return and (b) the volatility (standa deviation) of a portfolio that consists of a long position of $10,000 in Johnson & Johnson and a short position of $1,500 in Walgreens. a. Calculate the expected return. The expected return is %. (Round to two decimal place.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Expected Return 7.2% 10.7% Johnson & Johnson Walgreens Boots Alliance Standard Deviation 14.8% 21.3% - X
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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Question
Q11-4
Transcribed Image Text:Suppose Johnson & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown here,, with a correlation of 20%. Calculate (a) the expected return and (b) the volatility (standard
deviation) of a portfolio that consists of a long position of $10,000 in Johnson & Johnson and a short position of $1,500 in Walgreens.
a. Calculate the expected return.
The expected return is %. (Round to two decimal place.)
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
Expected Return
7.2%
10.7%
Johnson & Johnson
Walgreens Boots Alliance
(・・・ )
Standard Deviation
14.8%
21.3%
X
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