Consider the following expected annual returns and standard deviations:









What would be the oneyear expected return and standard deviation of a portfolio that consists of 5,000 shares of Boeing and 1,000 shares of Amazon.com stocks? Boeing trades at $145.46 a share and Amazon.com trades at $433.7 a share as of today. Suppose the correlation coefficient between the annual stock returns of the two companies is 0.
A. Expected return: 6.07%; Standard deviation: 11.3%
B. Expected return: 6.33%; Standard deviation: 7.4%
C. Expected return: 4.61%; Standard deviation: 11.0%
D. Expected return: 4.61%; Standard deviation: 12.1%
E. Expected return: 5.13%; Standard deviation: 22.7%
F. Expected return: 5.13%; Standard deviation: 9.7%
Use the information provided in the previous question. Complete the Sharpe Ratio for each of the following three assets: (1) the Boeing stock; (2) the Amazon stock; (3) the portfolio discussed in Question 8. Use 1.1% as the risk free rate. Which one of these three assets gives the highest Sharpe Ratio?
A. Boeing: 0.4925; Amazon: 0.8832; Portfolio: 0.3191
B. Boeing: 0.2403; Amazon: 0.8832; Portfolio: 0.2313
C. Boeing: 0.4925; Amazon: 0.3862; Portfolio: 0.3191
D. Boeing: 0.2403; Amazon: 0.3862; Portfolio: 0.4146
E. Boeing: 0.4925; Amazon: 0.8832; Portfolio: 0.0439
F. Boeing: 0.3325; Amazon: 0.3832; Portfolio: 0.5139
,
Get Answers For Free
Most questions answered within 1 hours.