Question

Hyacinth Macaw invests 52% of her funds in stock I and the balance in stock J....

Hyacinth Macaw invests 52% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 18%, and on J it is 22%. (Use decimals, not percents, in your calculations.) a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Portfolio variance b. Calculate the variance of portfolio returns, assuming the correlation is .5. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Portfolio variance c. Calculate the variance of portfolio returns, assuming the correlation is 0. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Portfolio variance

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Weight of stock I is 52%

Weight of Stock J = 48%

a.

b.

3.

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
Hyacinth Macaw invests 65% of her funds in stock I and the balance in stock J....
Hyacinth Macaw invests 65% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 13%, and on J it is 28%. (Use decimals, not percents, in your calculations.) a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1. (Do not round intermediate calculations. Round your answer to 4 decimal places.) b. Calculate the variance of portfolio returns, assuming the correlation is 0.7. (Do not round...
Hyacinth Macaw invests 75% of her funds in stock I and the balance in stock J....
Hyacinth Macaw invests 75% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 13%, and on J it is 28%. (Use decimals, not percents, in your calculations.)     a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1. (Do not round intermediate calculations. Round your answer to 4 decimal places.)      Portfolio variance                   b. Calculate the variance of portfolio returns, assuming the...
Hyacinth Macaw invests 55% of her funds in stock I and the balance in stock J....
Hyacinth Macaw invests 55% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 16%, and on J it is 23%. (Use decimals, not percents, in your calculations.) a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1. (Do not round intermediate calculations. Round your answer to 4 decimal places.) Portfolio variance _______ b. Calculate the variance of portfolio returns, assuming the correlation is .6....
Hyacinth Macaw invests 66% of her funds in stock I and the balance in stock J....
Hyacinth Macaw invests 66% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 10%, and on J it is 26%. a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1. Portfolio variance                   b. Calculate the variance of portfolio returns, assuming the correlation is .3. (Do not round intermediate calculations. Round your answer to 4 decimal places.)       Portfolio variance                  c....
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 4.6%. The probability distribution of the two risky funds is as follows: Expected Return Standard Deviation    Stock fund (S) 16%         36%             Bond fund (B) 7%        30%         The correlation between the two fund returns is 0.16. 1A) Compute...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 21 % 36 % Bond fund (B) 13 % 22 % The correlation between the fund returns is 0.13. a-1. What are the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 19 % 32 % Bond fund (B) 12 15 The correlation between the fund returns is 0.11. a-1. What are the investment proportions...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term bond fund, and the third is a money market fund that provides a safe return of 8%. The characteristics of the risky funds are as follows: Expected Return Standard Deviation Stock fund (S) 16 % 35 % Bond fund (B) 12 15 The correlation between the fund returns is 0.13. a-1. What are the investment proportions in the minimum-variance portfolio...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 22 % 37 % Bond fund (B) 14 23 The correlation between the fund returns is 0.10. a-1. What are the investment proportions...
A pension fund manager is considering three mutual funds. The first is a stock fund, the...
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 8%. The probability distribution of the risky funds is as follows: Expected Return Standard Deviation Stock fund (S) 19 % 34 % Bond fund (B) 10 18 The correlation between the fund returns is 0.11. a-1. What are the investment proportions...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT