Question

Consider a portfolio that contains two stocks. Stock "A" has an expected return of 15% and a standard deviation of 18%. Stock "B" has an expected return of -1% and a standard deviation of 25%. The proportion of your wealth invested in stock "A" is 50%. The correlation between the two stocks is -0.1.

What is the expected return of the portfolio? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Enter your response below rounded to 2 DECIMAL PLACES.

What is the standard deviation of the portfolio? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Enter your response below rounded to 2 DECIMAL PLACES.

Answer #1

Calculations-

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Consider two stocks, Stock D, with an expected return of 13
percent and a standard deviation of 25 percent, and Stock I, an
international company, with an expected return of 6 percent and a
standard deviation of 16 percent. The correlation between the two
stocks is −.14. What are the expected return and standard deviation
of the minimum variance portfolio? (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places.)

Consider two stocks, Stock D, with an expected return of 11
percent and a standard deviation of 26 percent, and Stock I, an
international company, with an expected return of 9 percent and a
standard deviation of 19 percent. The correlation between the two
stocks is –0.12. What are the expected return and standard
deviation of the minimum variance portfolio? (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places.).

You are creating a portfolio of two stocks. Pear Inc. has
expected return of 15% and standard deviation of 30%. InstaCafe
Inc. has expected return of 13% and standard deviation of 40%. The
two stocks' covariance is -0.036 and the risk free rate is 2%.
What percentage of the Optimal Risky Portfolio will be invested
in Pear Inc?
Provide your answer in percent rounded to two decimals,
omitting the % sign.

Consider the following two stocks.
Consider the following two stocks.
Probabilities (pi )
Stock "A"
Stock "B"
Recession
p1= 34%
-3%
1%
Normal
p2= 21%
3%
-11%
Boom
p3= 45%
14%
22%
The portfolio weights for stocks "A" and "B" are 0.35 and 0.65,
respectively.
What are the expected returns of stock "A" and "B"? Enter your
answers as a percentage. Do not put the percent sign in your
answers. Round your answers to 2 DECIMAL PLACES.
E(ra)=
Correct response:...

There are two stocks in the market, Stock A and Stock B . The
price of Stock A today is $85. The price of Stock A next year will
be $74 if the economy is in a recession, $97 if the economy is
normal, and $107 if the economy is expanding. The probabilities of
recession, normal times, and expansion are .30, .50, and .20,
respectively. Stock A pays no dividends and has a correlation of
.80 with the market portfolio....

An investor can design a risky portfolio based on two stocks, A
and B. Stock A has an expected return of 21% and a standard
deviation of return of 39%. Stock B has an expected return of 14%
and a standard deviation of return of 20%. The correlation
coefficient between the returns of A and B is .35. The risk-free
rate of return is 5%. The standard deviation of returns on the
optimal risky portfolio is _________. When solving this...

Consider the following
information on a portfolio of three stocks:
State of
Economy
Probability
of
State of Economy
Stock A
Rate of Return
Stock B
Rate of Return
Stock C
Rate of Return
Boom
.14
.05
.35
.47
Normal
.52
.13
.25
.23
Bust
.34
.19
–.24
–.38
Required:
(a)
If your portfolio is invested 42 percent each in A and B and 16
percent in C, what is the portfolio’s expected return, the
variance, and the standard deviation? (Do...

Consider the following information on a portfolio of three
stocks:
State of
Probability of
Stock A
Stock B
Stock C
Economy
State of Economy
Rate of Return
Rate of Return
Rate of Return
Boom
.13
.08
.33
.54
Normal
.54
.16
.18
.26
Bust
.33
.17
−
.17
−
.36
a. If your portfolio is invested 38 percent each in A and B and
24 percent in C, what is the portfolio’s expected return, the
variance, and the standard deviation?...

14. Stock A has a beta of 1.95 and a standard deviation of
return of 42%. Stock B has a beta of 3.75 and a standard deviation
of return of 70%. Assume that you form a portfolio that is 60%
invested in Stock A and 40% invested in Stock B. Using the
information in question 13, according to CAPM, what is the expected
rate of return on your portfolio? Enter your answer rounded to two
decimal places.
Question 13 for...

Consider the following information:
Rate of Return If State Occurs
State of
Probability
of
Economy
State of
Economy
Stock A
Stock B
Recession
.25
.04
–.17
Normal
.30
.10
.17
Boom
.45
.15
.37
a.
Calculate the expected return for the two stocks. (Do
not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places. Omit the "%" sign in your
response.)
Expected return for
A
%
Expected return for
B
%
b.
Calculate...

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