Question

**Portfolio P consists of Stock X and Stock Y. Stock X
weight is 70%. Stock X expected return is 14%, Stock Y expected
return is 10%. Stock X standard deviation of return is 3%, Stock Y
standard deviation of return is 1%. Correlation of Stock X and
Stock Y returns is -0.46. Expected portfolio P return
is:**

6.91% |
||

8.50% |
||

12.80% |
||

13.26% |

Answer #1

The expected portfolio return is the weighted average returns of its constituents wheretge weights are the percentage invested in each constituent. As the portfolio contains only X and Y. % investment in Y is (1-0.70)

Expected portfolio return = (%invested in stock X)*(expected return of stock X) + (%invested in stock Y)*(expected return of stock Y)

= (0.70*14) + (1-0.70)*(10)

= (9.8 + 3)%

= 12.8%

Thus, expected return of portfolio is 12.8%. The third option is correct.

Given the following information on a portfolio of Stock X and
Stock Y, what is the portfolio standard deviation?
Probability of boom state = 30%
Probability of normal state = 70%
Expected return on X = 14.5%
Expected return on Y = 14%
Variance on X = 0.004725
Variance on Y = 0.0189
Portfolio weight on X = 50%
Portfolio weight on Y = 50%
Correlation between X and Y = -1

A portfolio consists of 50% invested in Stock X and 50% invested
in Stock Y. We expect two probable states to occur in the future:
boom or normal. The probability of each state and the return of
each stock in each state are presented in the table below.
State
Probability of state
Return on Stock X
Return on Stock Y
Boom
30%
25%
35%
Normal
70%
10%
5%
What are the expected portfolio return and standard
deviation?
Select one:
a....

Stocks X and Y have the following probability distributions of
expected future returns:
Probability
Stock X
Stock Y
0.15
-5%
-8%
0.35
7%
10%
0.30
15%
18%
0.20
10%
25%
Expected return
Standard deviation
6.42%
Correlation between Stock X and Stock Y
0.8996
i. Calculate the expected return for each stock.
ii. Calculate the standard deviation of returns for Stock Y.
iii. You have $2,000. You decide to put $500 of your money in
Stock X and the rest in...

Using the data in the following table, answer questions.
Year
Stock X
Stock Y
2012
-11%
-5%
2013
15%
25%
2014
10%
15%
2015
-5%
-15%
2016
5%
-5%
2017
8%
-2%
2018
7%
10%
2019
5%
15%
Average return
Standard deviation
Correlation between Stock X and Stock Y
0.7567
1.Calculate the standard deviation of returns for Stocks X and
Y.
2.For a portfolio that is 75% weighted in Stock X, and 25%
weighted in Stock Y, calculate the expected...

,
Stocks A and B have the following returns:
Stock A
Stock B
1
0.09
0.07
2
0.07
0.04
3
0.12
0.04
4
−0.03
0.02
5
0.08
−0.05
a. What are the expected returns of the two stocks?
b. What are the standard deviations of the returns of the two
stocks?
c. If their correlation is 0.46 ,what is the expected return and
standard deviation of a portfolio of
76% stock A and 24% stock B?
a. What are the...

You want to invest in two shares, X and Y. The following data
are available for the two shares:
Share X
Expected Return: 9%
Standard Deviation :14%
Beta: 1.10
Share Y
Expected Return: 7%
Standard Deviation: 12%
Beta : 0.85
If you invest 70 percent of your funds in Share X, the remainder
in Share Y and if the correlation of returns between X and Y is
+0.7, compute the expected return and the standard deviation of
returns from the...

a stock portfolio consists of 19 of stock x and 30 of stock Y.
In one year from now, stock x had an expected value of 21 and a
variance of 70 while stock y has an expected value of 41and a
variance of 24.The two stocks are in different sectors and the
covariance between their prices is 0.15. what is the variance of
the value of the portfolio one year from now? Round to two decimal
places

a stock portfolio consists of 19 of stock x and 30 of stock Y.
In one year from now, stock x had an expected value of 21 and a
variance of 70 while stock y has an expected value of 41and a
variance of 24.The two stocks are in different sectors and the
covariance between their prices is 0.15. what is the variance of
the value of the portfolio one year from now? Round to two decimal
places. Can anyone...

question 3
Your portfolio consists of two stocks. You have $2000 in stock A
and $8000 in stock B. The returns for stock A have a standard
deviation of 20% and the returns for stock B have a standard
deviation of 10%. The correlation coefficient between A and B is
0.6. What is your portfolio standard deviation?
Select one:
a. 9.8%
b. 11.2%
c. 6.8%
d. 10.2%
e. 10.9%
question 4
If investors require a 5.5% nominal return and the...

A portfolio consists of Stock A and Stock B. Data for the 2
stocks is shown below
Stock A: expected return
12%
Stock A: standard deviation
40%
Stock B: expected return
14%
Stock B: standard deviation
60%
Correlation between A and B
0.35
Stock A beta
0.90
Stock B beta
1.20
% portfolio in Stock A
45%
% portfolio in Stock B
55%
A Calculate the expected return of the portfolio
portfolio : expected return
B Calculate the...

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