To select: Thereal estate return of which property affects the portfolio risk is to be determined . Introduction : The portfolio risk is defined as the combination of assets which carries its own risk with each investment. The standard deviation is used to determine that in which manner the values from a data set vary from its mean value. This is calculated by the square root of the variance. s t a n d a r d d e v i a t i o n = v a r i a n c e The expected return is defined as the return which is obtained on the risky asset that is expected in future. Correlation represents the relation between the two data sets. It shows that in which manner it corresponds to the changes in the value of alternate set. When the one data is increased and along with other is also increasing or vice-versa, then it is called as positive Correlation.

Question

Want to see the full answer?

Answer 1

Question

Chapter 7, Problem 2PS

Summary Introduction

To select: Thereal estate return of which property affects the portfolio risk is to be determined.

Introduction : The portfolio risk is defined as the combination of assets which carries its own risk with each investment.

The standard deviation is used to determine that in which manner the values from a data set vary from its mean value. This is calculated by the square root of the variance.

standard deviation=variance

The expected return is defined as the return which is obtained on the risky asset that is expected in future.

Correlation represents the relation between the two data sets. It shows that in which manner it corresponds to the changes in the value of alternate set. When the one data is increased and along with other is also increasing or vice-versa, then it is called as positive Correlation.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Hello tutor i need help with no ai.

Hello tutor i need help in this question.

Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $75,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $7,500 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life. A new high-efficiency digital-controlled flange-lipper can be purchased for $130,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $45,000 per year, although it will not affect sales. At the end of its useful life, the high-efficiency machine is estimated to be worthless. MACRS depreciation will be used, and the machine will be depreciated over its 3-year class life rather than its 5-year economic life, so the applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. The old machine can be sold today for $50,000. The firm's tax rate is 25%, and the…