You are creating a new portfolio by investing 50% of your money in a stock fund and the rest in a bond fund. The expected return is 14% on the stock fund and 6% on the bond funor The standard deviation is 24% for the stock fund and 12% for the bond fund. The correlation between the stock and bond funds is 0.55. What is the standard deviation of your portfolio? A.2.59% B.8.86% OC. 16.1% OD. 15.4%

You are creating a new portfolio by investing 50% of your money in a stock fund and the rest in a bond fund. The expected return is 14% on the stock fund and 6% on the bond funor The standard deviation is 24% for the stock fund and 12% for the bond fund. The correlation between the stock and bond funds is 0.55. What is the standard deviation of your portfolio? A.2.59% B.8.86% OC. 16.1% OD. 15.4%

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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Stock X has a standard deviation of return of 25 percent. Stock Y has a standard deviation of return of 5 percent. The correlation coefficient between the two stocks is 0.5. If you invest 60 percent of your funds in Stock X and 40 percent in Stock Y, what is the standard deviation of your portfolio? Multiple Choice O 14.2 percent 24.9 percent 16.1 percent 18.7 percent
A portfolio is invested 24 percent in Stock G, 39 percent in Stock J, and 37 percent in Stock K. The expected returns on these stocks are 10.5 percent, 13 percent, and 18 percent, respectively. What is the portfolio's expected return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
An investor plans to invest funds in the following stocks: Stock Beta Amount Invested A 1.39 $1,939.00 B 1.21 $2,818.00 C 0.75 $1,378.00 The risk-free rate is currently 3.00%, while the market risk premium is 6.00%. What is the beta of this portfolio?
You form a risky-risky portfolio composed of two stocks: A and B. Stock Expected Return (mean) Standard Deviation A B Weight in A 75% 18% 6% Correlation p=0.2 The mean and the standard deviation of the A-B portfolio with given weights were calculated for you: 20% Weight in B 25% 30% 15% 80% Expected Return (mean) Use the above information to answer questions 10 - 13. The TBill rate is 5%. The risk premium on the 75-in-A/25-in-B portfolio is: Its Sharpe Ratio is:_ #11 15.00% Std Deviation #13 % 23.5385% Consider the 75-in-A/25-in-B portfolio and combine it with the T-bill yielding 5%. Fill in the mean and the standard deviation of the new risky-riskless portfolio with given weights: Weight in 75A/25B Weight in T-bill Expected Return Standard Deviation #12 % #10 %
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You own a portfolio that has $2,650 invested in Stock A and $4,450 invested in Stock B. If the expected returns on these stocks are 8 percent and 11 percent, respectively, what is the expected return on the portfolio? Stock A value Stock B value Stock A E(R) Stock B E(R) Complete the following analysis. Do not hard code values in your calculations. Portfolio value Weight of A Weight of B $ 2,650 $ 4,450 8.00% 11.00% Portfolio E(R)
You construct a two-stock portfolio using stock A and stock B. You invest $700 in stock A and $300 in stock B. The return standard deviation of stock A is 15%, that of stock B is 20%, and the return correlation coefficient between stock A and stock B is 0.6. The return standard deviation of your portfolio is _____. 13.57% 14.89% 16.50% 17.50%
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Qn4: Assume a two-stock portfolio created with $50,000 is invested in both HT and Collections. The expected returns are given below: Calculate the portfolio's return for each state of economy and fill them in the last column, under "Portfolio" (Hint: The portfolio's expected return is a weighted average of the returns of the portfolio's component assets). Calculate the portfolio's expected return (Hint: You have to incorporate the probability distribution of each state of economy). Calculate the portfolio's standard deviation. Economy Recession Below average Average Above average Boom Prob. HT 0.1 -27.0% 0.2 -7.0% 0.4 15.0% 0.2 30.0% 0.1 45.0% Coll 27.0% 13.0% 0.0% -11.0% -21.0% Portfolio
1. The following table presents the expected returns of three stocks and the risk free rate. в 4% Stock A 8% Expected return What is the expected return and risk on an equally weighted portfolio composed of these four assets? The standard deviation of stock A is 10% and the covariance between A and B equals 0.0045. The correlation matrix between A, B and C is: 14% 4% Correl B A 1 0.3 0.7 B 0.3 0.5 0.5 Combining stocks A and C in a portfolio in equal proportions will result in a variance of 1.95%. 0.7
Consider two asset classes: Stocks and Bonds. You estimate the following parameters for these two asset class funds. correlation matrix b/n Stocks and Bonds E(r ) sd(r) Stocks Bonds Stocks 19% 28% 10.5 Bonds 10% 8% 0.5 1 Consider a $80,000 portfolio consisting of $60,000 in Stocks and $20,000 in Bonds. So, the portfolio is 75% in Stocks and 25% in Bonds. Given the expected return on the portfolio is 16.75%, and the standard deviation of the portfolio return is 22.07%, what is the 2.5% value at risk (note: the 95% confidence interval lower limit on the portfolio value is the value of the portfolio at this level of loss)? (use 2 decimals without $, so a loss of -$10.00 is -10.00) Answer:Question 2 - 21205.76 Feedback The correct answer is: -21908.92 expain
You have a portfolio that is 33 percent invested in Stock R, 17 percent invested in Stock S, with the remainder in Stock T. The expected return on these stocks is 9.4 percent, 10.8 percent, and 13.1 percent, respectively. What is the expected return on the portfolio? Multiple Choice 11.10% 11.29% 11.49% 12.05% 10.18%

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