Question

Suppose Wesley Publishing's stock has a volatility of 50 %, while Addison Printing's stock has a volatility of 20 %. If the correlation between these stocks is 65 %, what is the volatility of the following portfolios of Addison and Wesley:

a. 100 % Addison

b. 75 % Addison and 25 % Wesley

c. 50 % Addison and 50 % Wesley

a. The volatility of a portfolio of 100 % Addison stock is nothing _______ %. (Round to two decimal places.)

b. The volatility of a portfolio of 75 % Addison and 25 % Wesley is nothing ______ %. (Round to two decimal places.)

c. The volatility of a portfolio of 50 % Addison and 50 % Wesley is nothing _______ %. (Round to two decimal places.)

Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Suppose Wesley Publishing's stock has a volatility of 55 %,
while Addison Printing's stock has a volatility of 30 %. If the
correlation between these stocks is 15 %, what is the volatility
of the following portfolios of Addison and Wesley:
a. 100 % Addison
b. 75 % Addison and 25 % Wesley
c. 50 % Addison and 50 % Wesley
a. The volatility of a portfolio of 100 % Addison stock is
nothing%. (Round to two decimal places.)...

Suppose Wesley Publishing's stock has a volatility of
70 %, while Addison Printing's stock has a volatility of
25 %. If the correlation between these stocks is
10 %, what is the volatility of the following portfolios of
Addison and Wesley:
a- 100% Addison
b. 75% Addison and 25% Wesley
c. 50% Addison and 50% Wesley
Round answers to two decimal places

Suppose Wesley Publishing's stock has a volatility of
65%,
while Addison Printing's stock has a volatility of
20%.
If the correlation between these stocks is
45%,
what is the volatility of the following portfolios of Addison
and Wesley:
a.
100%
Addison
b.
75%
Addison and
25%
Wesley
c.
50%
Addison and
50%
Wesley

Suppose Wesley Publishing's stock has a volatility of
60%,while Addison Printing's stock has a volatility of 30%.If the
correlation between these stocks is 25%, what is the volatility of
the following portfolios of Addison and Wesley:
Make sure to round answer 2 decimal place
a. 100% Addison
b. 75% Addison and 25% Wesley
c.50% Addison and 50% Wesley

Suppose Wesley? Publishing's stock has a volatility of 45%?,
while Addison? Printing's stock has a volatility of 25%. If the
correlation between these stocks is 30%?, what is the volatility of
the following portfolios of Addison and? Wesley: a. 100% Addison b.
75% Addison and 25% Wesley c. 50% Addison and 50% Wesley.

Consider a portfolio consisting of the following three
stocks:
Portfolio Weight
Volatility
Correlation with the Market Portfolio
HEC corporation
0.27
13%
0.37
Green Midget
0.39
29%
0.64
AliveAndWell
0.34
12%
0.53
The volatility of the market portfolio is 10% and it has an
expected return of 8%. The risk-free rate is 3%
a. Compute the beta and expected return of each stock.
(Round to two decimal places.)
b. Using your answer from part a, calculate the expected
return of the...

You are a risk averse investor. You are willing to add an
investment with high volatility provided the correlation
coefficient of this investment with other stocks in the portfolio
is not less than +1.
True
False
10 points
The stock A has 25% standard deviation on its expected return
and the stock B has 25% standard deviation on its expected return.
The expected return for the portfolio of these two stocks will have
a standard deviation of 25%.
True...

Which of the following statements is not true? a) Correlation,
not covariance, allows us to accurately measure the degree to which
stock returns tend to move together in the same or opposite
directions b) Regardless of the weights assigned to individual
stocks in a two stock portfolio, the lower the correlation of the
stocks’ returns, the lower the volatility of the portfolio returns.
c) For some investors, 100% investment in a single stock can be an
efficient choice from the...

Yesterday Stock A had a price of $50 per share while Stock B had
a price of $25 per share. Stock A has 100 shares outstanding while
Stock B has 10 shares outstanding. If the prices today of Stock A
and B are $55 and $30 respectively, the return of the Equal
Weighted Index of these two stocks would be _________%

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....

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