You have OMR 5,000 to invest in shares of A or B the expected returns and standard deviations of which are as follows. expected return standard deviation A 17 6 B 25 10 Required: a. Calculate expected return and standard deviation from a portfolio consisting of 50 per cent of A and 50 per cent of B assuming shares in A and B are perfectly negatively correlated. b. What is meant by coefficient of variation? Calculate coefficient of variation for shares in A and B and decide which of the two shares you would prefer to investment in and why?
You have OMR 5,000 to invest in shares of A or B the expected returns and standard deviations of which are as follows. expected return standard deviation A 17 6 B 25 10 Required: a. Calculate expected return and standard deviation from a portfolio consisting of 50 per cent of A and 50 per cent of B assuming shares in A and B are perfectly negatively correlated. b. What is meant by coefficient of variation? Calculate coefficient of variation for shares in A and B and decide which of the two shares you would prefer to investment in and why?
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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You have OMR 5,000 to invest in shares of A or B the expected returns and standard deviations of which are as follows.
| expected return | standard deviation | |
| A | 17 | 6 |
| B | 25 | 10 |
Required:
a. Calculate expected return and standard deviation from a portfolio consisting of 50 per cent of A and 50 per cent of B assuming shares in A and B are perfectly negatively correlated.
b. What is meant by coefficient of variation? Calculate coefficient of variation for shares in A and B and decide which of the two shares you would prefer to investment in and why?
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