You are currently considering in investing Rs.1.2 million in equity investmentportfolio. Your analysis reveals that equity stock of the following threecompanies are suitable options for your investment.CompanyPRExpected retum (%)Standard deviation (%)Correlation coefficient;252220302624PQQR-0.5+0.4PR+0.6You are required to;(a) Calculate the expected returm of the portfolio if Rs.1.2 million is equallyinvested in the stocks of all three companies.

Given: P Expected return = 25% Q Expected return = 22% R Expected return = 20%

You are currently considering in investing Rs.1.2 million in equity investment portfolio. Your analysis reveals that equity stock of the following three companies are suitable options for your investment. Company R 22 P Expected retum (%) Standard deviation (%) Correlation coefficient; PQ QR PR 25 20 30 26 24 -0.5 +0.4 +0.6 You are required to; (a) Calculate the expected retum of the portfolio if Rs.1.2 million is equally invested in the stocks of all three companies.

You are currently considering in investing Rs.1.2 million in equity investment portfolio. Your analysis reveals that equity stock of the following three companies are suitable options for your investment. Company R 22 P Expected retum (%) Standard deviation (%) Correlation coefficient; PQ QR PR 25 20 30 26 24 -0.5 +0.4 +0.6 You are required to; (a) Calculate the expected retum of the portfolio if Rs.1.2 million is equally invested in the stocks of all three companies.

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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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 %
You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock A B C Investment $196,000 294,000 490,000 Beta Expected rate of return 1.50 0.55 1.35 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18 percent and that the risk-free rate is 9 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%) Beta of the portfolio %
Q1. One of your company's customer has approached you and the customer says that he wishes to invest 20,000 OMR. Following data is provided for your reference Company name Expected returns R Standard Deviations o Euro Foods 20 | 10 Sohar Foods 14 8. A. Calculate the expected returns for the suggested portfolios as below, Portfolio Euro Foods Sohar Foods 1. 25% 1 75% 75% 25% 3. 50% 50% B. Calculate the coefficient of variation of shares on Euro Foods and Sohar Foods. C. 89 F C H/2
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You are an active investor in the securities market and you have established an investment portfolio of two stock A and B five years ago. d) Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio? ABExpected return12.5%18.5%Standard Deviation of return15%20%Correlation of coefficient (p)0.4
Current Attempt in Progress You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock A B C Investment $190,000 285,000 475,000 Beta of the portfolio Beta Expected rate of return 1.45 0.60 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 17 percent and that the risk-free rate is 6 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%.) 1.30 %
if you were to invest 40% in A and 60% in B, what would be the expected return of your portfolio? Enter return in decimal form, rounded to 4th digit, as in "0.1234"
You decide to invest in a portfolio consisting of 25 percent Stock A, 25 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock A Stock B Stock C Recession .17 - 15.4 % - 2.2 % - 21.1 % Normal .50 11.6 % 6.8 % 15.4 % Boom .33 25.2 % 14.1 % 30.0 % Multiple Choice 12.87% 12.34% 15.21% 13.95% 11.80%
BHAVNAGAR
Consider a position consisting of 200,000 investment in asset A and 300,000 investment in asset B. Assume that the daily volatility of the assets are 1.5% and 1.8% respectively, and that coefficient of correlation between their returns is 0.4. What is the five day 95% VAR for the portfolio (given 95% confidence level represents 1.65 standard deviations on the left side of the normal distribution)?
You want to create a portfolio equally as risky as the market, and you have $250,000 to invest. Given this information, fill in the three missing pieces of information in the following table. Show your calculations: Investment Betal 0.90 Asset Stock A $50,000 Stock B $70,000 Stock C Risk-Free Asset 1.25 1.60
You are an active investor in the securities market and you have established an investment portfolio of two stock A and B five years ago. Required: d) Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio? A B Expected return 12.5% 18.5% Standard Deviation of return 15% 20% Correlation of coefficient (p) 0.4

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