Question

Using the following information to calculate the standard deviation of a two-stock portfolio. Characteristics for this...

Using the following information to calculate the standard deviation of a two-stock portfolio. Characteristics for this two-stock portfolio: Caffeine Plus Drink stock: Amount invested $40,000. Expected Return = 11%. Standard Deviation = 15%; Sparkling Drink Stock: Amount invested $60,000. Expected Return = 25%. Standard Deviation = 20%. Correlation between Caffeine Plus Drink stock and Sparkling Drink stock is 0.30

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Standard deviation a portfolio is measured by the below formula:

Weight of CPD, w1 = 40,000/(40000 + 60000) = 40%

Std deviation of CPD, ?1 = 15%

Weight of SPD, w2 = 60,000/(40000 + 60000) = 60%

Std deviation of SPD, ?2 = 20%

Correlation coefficient, ? = 0.30

Std deviation of portfolio = 14.94%

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Calculate the expected returns, standard deviations and coefficient of variations of a two-stock portfolio. We have...
Calculate the expected returns, standard deviations and coefficient of variations of a two-stock portfolio. We have the following data for Stock 'C' and Stock 'S'. Out of a total portfolio valuing SR 100,000, SR 40,000 is invested in stock 'C' and SR 60,000 in stock 'S'. Stock C Stock S Expected Return 11% 25% Standard Deviation 15% 20% Correlation 0.3 Note: For calculation of expected returns, standard deviations and coefficient of variations, assume the following allocation mix to run a...
You are given the following information about the stocks in a two-stock portfolio Stock Return Portfolio...
You are given the following information about the stocks in a two-stock portfolio Stock Return Portfolio Weight Standard Deviation Blue Hotel Inc. 22% 45% 9% Joys Food Inc. 25% 55% 11% The correlation coefficient between the two stocks is 0.5. Using the information above, calculate the following: The expected return of the portfolio, The variance of the portfolio, The standard deviation of the portfolio.
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return and standard deviation of a portfolio that is 60 percent invested in 3 Doors, Inc., and 40 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 3 Doors, Inc. Down Co. Expected return, E(R) 11 % 10 % Standard deviation, σ 31 33 Correlation .16
Use the following information to calculate the percentage standard deviation of a portfolio that is 42.8...
Use the following information to calculate the percentage standard deviation of a portfolio that is 42.8 percent invested in 3 Doors, Inc., and the rest invested in Down Co.: 3 Dorrs, Inc. Down Co. Expected return 21% 13% Standard deviation 50 35 Correlation 0.43
The following information is available for two stocks: Stock Shares Price per share Expected Return Standard...
The following information is available for two stocks: Stock Shares Price per share Expected Return Standard Deviation A 500 $40 14% 18% B 400 $25 21% 22% You are fully invested in the two stocks. The correlation coefficient between the two stock returns is .80 a. Compute the weights of the two stocks in your portfolio. b. Compute the portfolio expected return. c. Compute the portfolio standard deviation. d. You consider selling 250 shares of stock A, and buy with...
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Inc., and 50 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) 3 Doors, Inc. Down Co.   Expected return, E(R) 14 % 12 %   Standard deviation, σ 44 46   Correlation .29         Expected return %   Standard deviation...
An investor wants to form a risky portfolio based on two stocks, A and B. Stock...
An investor wants to form a risky portfolio based on two stocks, A and B. Stock A has an expected return of 15% and a standard deviation of return of 18%. Stock B has an expected return of 12% and a standard deviation of return of 18%. The correlation coefficient between the returns of A and B is -0.30. The risk-free rate of return is 8%. The proportion of the optimal risky portfolio that should be invested in stock A...
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return and standard deviation of a portfolio that is 50 percent invested in 3 Doors, Inc., and 50 percent invested in Down Co.: (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 3 Doors, Inc. Down Co. Expected return, E(R) 19 % 14 % Standard deviation, σ 49 51 Correlation .34
An investor can design a risky portfolio based on two stocks, 1 and 2. Stock 1...
An investor can design a risky portfolio based on two stocks, 1 and 2. Stock 1 has an expected return of 15% and a standard deviation of return of 25%. Stock 2 has an expected return of 12% and a standard deviation of return of 20%. The correlation coefficient between the returns of 1 and 2 is 0.2. The risk-free rate of return is 1.5%. Approximately what is the proportion of the optimal risky portfolio that should be invested in...
An investor can design a risky portfolio based on two stocks, A and B. Stock A...
An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 16% and a standard deviation of return of 30%. Stock B has an expected return of 11% and a standard deviation of return of 15%. The correlation coefficient between the returns of A and B is .5. The risk-free rate of return is 5%. The proportion of the optimal risky portfolio that should be invested in stock B is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT