Actual return of portfolio. Introduction: Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

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Answer 1

Question

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

d)

Summary Introduction

To discuss:

Correlation of assets.

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

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q2a

Using the data in the following table, Year 2010 2011 2012 2013 2014 2015 Stock A -10% 20% 5% -5% 2% 9% Stock B 21% 7% 30% -3% -8% 25% consider a portfolio that maintains a 50% weight on stock A and a 50% weight on stock B. What is the return each year of this portfolio? Based on your results from part

Portfolio return and standard deviation Jamie Wong is thinking of building an investment portfolio containing two exchange traded funds (ETFs) Jamie plans to invest $2,000 in Vanguard S&P 500 ETF (VOO) and $8,000 in Invesco QQQ Trust (QQQ). Jamie has decided to analyze some historical returns to get a sense for her portfolio's possible future risk and return. Six years of historical annual returns for each ETF are shown in the following table: a. Calculate the portfolio return, rp, for each of the 6 years assuming that 20% is invested in VOO and 80% is invested in QQQ b. Calculate the average annual return for each ETF and the portfolio over the six-year period. c. Calculate the standard deviation of annual returns for each ETF and the portfolio. How does the portfolio standard deviation compare to the standard deviations of the individual ETFs? d. Calculate the correlation coefficient for the two ETFs. How would you characterize the correlation of returns of the two ETFs? e. Discuss…

Answer 2

Question

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

d)

Summary Introduction

To discuss:

Correlation of assets.

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

d)

Summary Introduction

To discuss:

Correlation of assets.

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

d)

Summary Introduction

To discuss:

Correlation of assets.

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

d)

Summary Introduction

To discuss:

Correlation of assets.

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Answer 6

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

Answer 7

Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

Answer 8

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Answer 9

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Answer 10

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

Answer 11

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

Answer 12

d)

Summary Introduction

To discuss:

Correlation of assets.

Answer 13

d)

Summary Introduction

To discuss:

Correlation of assets.

Answer 14

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Answer 15

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQ Ch. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQ Ch. 8.2 - Prob. 8.6RQ Ch. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQ Ch. 8.3 - How does international diversification enhance...

Actual return of portfolio. Introduction: Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

Solution Summary: The author explains how the actual return of portfolio can be calculated using the following formula.

Concept explainers

Videos

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

To discuss:

Correlation of assets.

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Want to see the full answer?

Chapter 8 Solutions

Actual return of portfolio. Introduction: Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

Solution Summary: The author explains how the actual return of portfolio can be calculated using the following formula.

Concept explainers

Videos

To discuss: Actual return of portfolio. Introduction: Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

To discuss: Average returns Introduction: Return: In financial context, return is seen as percentage that represents the profit in an investment. Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

To discuss: Correlation of assets.

To discuss: Benefits of diversification by creation of portfolio. Introduction: Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

Want to see the full answer?

Chapter 8 Solutions

To discuss:

Actual return of portfolio.

Introduction:

Portfolio return: In financial context; portfolio return is seen as percentage that represents the profit on a portfolio of investments.

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

To discuss:

Correlation of assets.

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.