The expected return and standard deviation of a portfolio that is 30 percent invested in 3 Doors, Inc., and 70 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) Standard deviation, o 56 13 % 12 % 36 What is the standard deviation if the correlation is +1? 0? -1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. )

The expected return and standard deviation of a portfolio that is 30 percent invested in 3 Doors, Inc., and 70 percent invested in Down Co. are the following: 3 Doors, Inc. Down Co. Expected return, E(R) Standard deviation, o 56 13 % 12 % 36 What is the standard deviation if the correlation is +1? 0? -1? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. )

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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Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .092, E(RB) = 152, đA = .362, and Og = .622. %3D Calculate the expected return of a portfolio that is composed of 37 percent A and 63 percent B when the correlation between the returns on A and B is .52. (Do not a-1. round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio that is composed of 37 percent A and 63 percent B when the correlation coefficient between the returns on A and B is .52. а-2. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio with the same portfolio weights as in h part (a) when the correlation coefficient between the returns on A and B is -.52. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a-1.…
The expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Incorporated, and 50 percent invested in Down Company. are the following: Expected return, E(R) Standard deviation, o 3 Doors, Incorporated 14% 42 Correlation +1 Correlation 0 Correlation-1 What is the standard deviation if the correlation is +1? 0? -1? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Standard Deviation 33.61 % Down Company 10% 31 %
Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .092, E(RB) = 152, OA = .362, and og = .622. Calculate the expected return of a portfolio that is composed of 37 percent A and а-1. 63 percent B when the correlation between the returns on A and B is .52. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio that is composed of 37 percent A and 63 percent B when the correlation coefficient between the returns on A and B is .52. а-2. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio with the same portfolio weights as in part (a) when the correlation coefficient between the returns on A and B is -.52. (Do b. not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
The expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Incorporated, and 40 percent invested in Down Company are the following: Expected return, E(R) Standard deviation, o Down 3 Doors, Incorporated Company. 118 12% 54 40 What is the standard deviation if the correlation is +1? 0? -1? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Correlation +1 Correlation 01 Correlation-1 Standard Deviation 2.00% 2.00% 2.00 %
Calculate the standard deviation of a portfolio with 0.24 invested in Asset A, 0.33 invested in Asset B, and the rest invested in Asset C. Express your answer as a decimal with four digits after the decimal point (e.g., 0.1234, not 12,34%). Std Dev(A) = 0.43, Std Devirg) = 0.67. Std Dev(rc)=0.53 Correlation(A) =-0.24, Correlation(Arc)-0.32, Correlationirere)=0.09 Type your answer.....
The expected return and standard deviation of a portfolio that is 30 percent invested in 3 Doors, Incorporated, and 70 percent invested in Down Company are the following: Down 3 Doors, Incorporated Company 13% 10% Expected return, E(R) Standard deviation, o 46 35 What is the standard deviation if the correlation is +1? 0? -1? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Standard Deviation Correlation +1 % Correlation 0 Correlation-1 % %
Use the following information to calculate the expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Incorporated, and 50 percent invested in Down Company: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. 3 Doors, Incorporated Down Company Expected return, E(R) Standard deviation, o Correlation 14% 10% 42 31 0.10 es Expected return Standard deviation % %
Use the following information to calculate the expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Incorporated, and 40 percent invested in Down Company: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Expected return, E(R) Standard deviation, o Correlation Expected return Standard deviation 3 Doors, Incorporated 16% 46 0.31 2.00% 2.00% Down Company 24% 48
Percentages need to be entered in decimal format, for instance 3% would be entered as .03. That is the return for stock C by the way Adjust the portfolio to consist of 33.33% Stock A, 33.33% Stock B, and 33.33% Stock C (row 31). How does this change affect the portfolio average rate of return, standard deviation, and coefficient of variation versus when 50% was invested in Stock A and 50% in Stock B? Make some other changes in the percentage of stocks in the portfolio (Row 31), making sure that the percentages add up to 100%. For example, you could enter 25% for Stock A, 25% for Stock B, and 50% for Stock C. Notice that the average rate of return for the portfolio remains constant for each scenario, but the standard deviation changes. Would you prefer to hold a portfolio consisting only of Stocks A and B or a portfolio that also includes Stock C? Why or why not?
Suppose you are given the following information about 2 stocks, what is the return standard deviation of a portfolio weighted 55% in stock A and 45% in stock B? E(RA)=16% E(RB)=8% σA=22% σB=12% σA,B=−0.003696 Enter rate in decimal form, rounded to 4th digit, as in "0.1234"
A stock has a beta of 1.2, the expected return on the market is 9 percent, and the risk-free rate is 1.5 percent. What must the expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Please format answer in a percentage as "X.XX"
You own a portfolio that has $3,00o0 invested in Stock A and $4,100 invested in Stock B. Assume the expected returns on these stocks are 10 percent and 16 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

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