Question

The domestic asset has an expected return of 9% and standard deviation of 25%

The foreign asset has an expected return of 15% and standard deviation of 35%

The correlation between two asset is 0.40. Assuming the portfolio has 30% invested in the domestic asset and the reminder in the foreign asset.

1. calculate the portfolio's expected return and standard deviation. SHOW YOUR WORK

rp=................%

op=................%

Answer #1

There are 2 assets. Asset 1: Expected return 7.5%, standard
deviation 9% Asset 2: Expected return 11%, standard deviation 12%.
You are not sure about the correlation between 2 assets. You hold
30% of your portfolio in asset 1 and 70% in asset 2.
What is the highest possible variance of your portfolio?
Hint 1: Think how the portfolio variance depends on the
correlation between 2 assets.
Hint 2: Think which values the correlation between Asset 1 and
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A stock fund has an expected return of 15% and a standard
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Asset K has an expected return of 11 percent and a standard
deviation of 26 percent. Asset L has an expected return of 9
percent and a standard deviation of 21 percent. The correlation
between the assets is 0.21. What are the expected return and
standard deviation of the minimum variance portfolio?
Expected return%
Standard deviation%

You have a portfolio with a standard deviation of 25 % and an
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Stock A
14%
22%
0.3
Stock B
14%
16%...

Suppose Asset A has an expected return of 10% and a standard
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Plot the attainable portfolios for a correlation of 0.35. Now
plot the attainable portfolios for correlations of +1.0 and
−1.0.
Suppose a...

Asset K has an expected return of 19 percent and a standard
deviation of 34 percent. Asset L has an expected return of 7
percent and a standard deviation of 18 percent. The correlation
between the assets is 0.43. What are the expected return and
standard deviation of the minimum variance portfolio? (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places.)
Expected return%
Standard deviation%

Expected Return Standard
Deviation
Stocks, S
14
30
Bonds, B 6
15
The correlation between stocks and bonds is ρ(S,B) = 0.05
Note: I've entered the expected returns and standard deviations
as whole numbers (not decimals)
Treat the risk-free rate as the number 2 not 0.02 or 2%.
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You wish to...

Calculate standard deviation
Your investment has a 40% chance of earning a 15% rate of
return, a 50% chance of earning a 10% rate of return, and a 10%
chance of losing 3%. What is the standard deviation of this
investment?
A.
8.43%
B.
5.14%
C.
9.29%
D.
7.59%
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standard deviation if both are combined into a portfolio with 70
percent invested in the first investment and 30 percent in the
second? Assume the correlation coefficient (ij) is -.40

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