Question

Consider the following two stocks.

Consider the following two stocks.
The portfolio weights for stocks "A" and "B" are 0.35 and 0.65, respectively. What are the expected returns of stock "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES. E(ra)= E(rb)= Click "Verify" to proceed to the next part of the question. Using the correct answers from the previous question, what are the standard deviations of stocks "A" and "B"? Enter your answers as a percentage. Do not put the percent sign in your answers. Round your answers to 2 DECIMAL PLACES. SDa= SDb= Click "Verify" to proceed to the next part of the question. Using the correct answers from the previous questions, what is the expected return of the portfolio? Enter your answer as a percentage. Do not put the percent sign in your answer. Round your answer to 2 DECIMAL PLACES. E(rp)= Click "Verify" to proceed to the next part of the question. Using the correct answers from the previous questions, what is the standard deviation of the portfolio? Enter your answer as a percentage. Do not put the percentage sign in your answer. Round your answer to 2 DECIMAL PLACES. SDp= Click "Verify" to proceed. |
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Answer #1

Consider the following two stocks.
Probabilities (pi )
Stock "a"
Stock "b"
Recession
p1= 31%
-4%
4%
Normal
p2= 26%
7%
-4%
Boom
p3= 43%
11%
26%
Expected Return
r¯a = 5.31
r¯b = 11.38
Standard Deviation
SDa = 6.44
SDb = 13.05
Question:
Using the correct answers from the previous questions, what is
the correlation between the two stocks? Enter your answer rounded
to 2 decimal places.
Corr(a, b) = ?

Consider a portfolio that contains two stocks. Stock "A" has an
expected return of 15% and a standard deviation of 18%. Stock "B"
has an expected return of -1% and a standard deviation of 25%. The
proportion of your wealth invested in stock "A" is 50%. The
correlation between the two stocks is -0.1.
What is the expected return of the portfolio? Enter your answer
as a percentage. Do not include the percentage sign in your
answer.
Enter your response...

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....

MacKinnon Co. currently has EBIT of $44,000 and is all equity
financed. EBIT are expected to grow at a rate of 2% per year. The
firm pays corporate taxes equal to 39% of taxable income. The cost
of equity for this firm is 16%.
What is the market value of the firm? Enter your answer rounded
to two decimal places.
Correct response: 191,714.29±0.01
Click "Verify" to proceed to the next part of the question.
Suppose the firm has a...

Consider the following information on a portfolio of three
stocks:
State of
Probability of
Stock A
Stock B
Stock C
Economy
State of Economy
Rate of Return
Rate of Return
Rate of Return
Boom
.13
.08
.33
.54
Normal
.54
.16
.18
.26
Bust
.33
.17
−
.17
−
.36
a. If your portfolio is invested 38 percent each in A and B and
24 percent in C, what is the portfolio’s expected return, the
variance, and the standard deviation?...

Consider the following information about three stocks:
State of Probability of Economy State of Economy Stock A Stock B
Stock C Boom .25 .34 .46 .58 Normal .50 .14 .12 .10 Bust .25 .05
−.26 −.46 a-1. If your portfolio is invested 20 percent each in A
and B and 60 percent in C, what is the portfolio expected return?
(Do not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.) a-2....

Assume Stocks A and B have the following characteristics: Stock
Expected Return Standard Deviation A 8.3% 32.3% B 14.3% 61.3% The
covariance between the returns on the two stocks is .0027. a.
Suppose an investor holds a portfolio consisting of only Stock A
and Stock B. Find the portfolio weights, XA and XB, such that the
variance of her portfolio is minimized. (Hint: Remember that the
sum of the two weights must equal 1.) (Do not round intermediate
calculations and...

Consider the following information on three
stocks:
Rate of Return If State OccursState of
EconomyProbability of State
of EconomyStock AStock BStock CBoom
.20 .20 .32 .54 Normal
.45 .18 .16 .14 Bust
.35 .02 −.34 −.42
a-1 If your portfolio is invested 40 percent each in A and B
and 20 percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
Portfolio expected return
%
a-2 What is the variance? (Do...

***I ONLY NEED C2 ANSWERED PLEASE**
Consider the following information on three
stocks:
Rate of Return If State OccursState of
EconomyProbability of State
of EconomyStock AStock BStock CBoom .20 .20 .32 .54 Normal .45 .18
.16 .14 Bust .35 .02 −.34 −.42
a-1 If your portfolio is invested 40 percent each in A and B
and 20 percent in C, what is the portfolio expected return? (Do
not round intermediate calculations. Enter your answer as a percent
rounded to 2...

Consider the following
information on a portfolio of three stocks:
State of
Economy
Probability
of
State of Economy
Stock A
Rate of Return
Stock B
Rate of Return
Stock C
Rate of Return
Boom
.14
.05
.35
.47
Normal
.52
.13
.25
.23
Bust
.34
.19
–.24
–.38
Required:
(a)
If your portfolio is invested 42 percent each in A and B and 16
percent in C, what is the portfolio’s expected return, the
variance, and the standard deviation? (Do...

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