User Account

All Pages

Calculate the expected return and standard deviation

Assignment Help Finance Basics
Reference no: EM131126385

You have a three-stock portfolio. Stock A has an expected return of 12 percent and a standard deviation of 41 percent, Stock B has an expected return of 16 percent and a standard deviation of 58 percent, and Stock C has an expected return of 13 percent and a standard deviation of 48 percent. The correlation between Stocks A and B is .30, between Stocks A and C is .20, and between Stocks B and C is .05. Your portfolio consists of 55 percent Stock A, 20 percent Stock B, and 25 percent Stock C. Calculate the expected return and standard deviation of your portfolio. The formula for calculating the variance of a three-stock portfoliois:

 

869_k.jpg

Reference no: EM131126385

Questions Cloud

Does it follow that an investor can control the level : In broad terms, why is some risk diversifiable? Why are some risks nondiversifiable? Does it follow that an investor can control the level of unsystematic risk in a portfolio, but not the level of systematic risk?
Derive our expression in the chapter for the portfolio : Derive our expression in the chapter for the portfolio weight in the minimum variance portfolio. (Danger! Calculus required!)
What are the portfolio weights : Using the result in Problem 23, show that whenever two assets have perfect negative correlation it is possible to find a portfolio with a zero standard deviation. What are the portfolio weights?
What are the standard deviation and expected return : Asset S has an expected return of 10 percent and a standard deviation of 19 percent. The correlation between the two assets is .50. What are the standard deviation and expected return of the minimum variance portfolio? What is going on here?
Calculate the expected return and standard deviation : Your portfolio consists of 55 percent Stock A, 20 percent Stock B, and 25 percent Stock C. Calculate the expected return and standard deviation of your portfolio. The formula for calculating the variance of a three-stock portfoliois
Why would the dividend yield differ significantly : Why would the dividend yield differ significantly from the rate earned on common stockholders’ equity?
Should the rate earned on common stockholders : Should the rate earned on common stockholders' equity normally be higher or lower than the rate earned on total stockholders' equity? Explain.
Calculate the expected return and standard deviation : The correlation between the two stocks is .25. Is it possible for there to be a minimum variance portfolio since the highest-return stock has the lowest standard deviation? If so, calculate the expected return and standard deviation of the minimum va..
Which ratio is normally higher : How does the rate earned on total assets differ from the rate earned on stockholders' equity?

Reviews

Write a Review

Finance Basics Questions & Answers

  Explanation and breakdown of all costs and values

PRJM6001 PROJECT COST MANAGEMENT - ASSIGNMENT. As a minimum you must provide the following information: -a detailed description of ALL your assumptions a detailed explanation and breakdown of all costs and values used in your costing (do NOT use pub..

  The investment opportunity of a lifetime

Your broker calls to offer you the investment opportunity of a lifetime, the chance to invest in mortgage-backed securities. The broker explains that these securities are entitled to the principal and interest payments received from a pool of resi..

  What should he or she be willing to pay for morris

If an investor has a 25 percent required rate of return for this stock, what should he or she be willing to pay for Morris?

  The expected return on the market stays

Suppose that the Treasury bill rate is 5% rather than 3%. Assume that the expected return on the market stays at 12%. Use the following information.

  Wre the two largest investing activities and

part 1 you are given the following information for barko industriesbarko industriesbalance sheet partialyear

  Time value of money and annuity

From the e-Activity, create a personal scenario that exemplifies the time value of money that includes the opportunity cost involved.

  Computing present value of stock by retention rate on equity

Retention rate and experience the return on equity of 14%. The required rate of return for investor is 12.5%. Compute the present value of the stock is?

  Start-up firm and net working capital financing

Start-up firm and net working capital financing Consider a firm planning to expand sales by $36 million/year. It requires additional facilities of $ 2 million.

  What is its level of inventory

Question 1: Soaring Eagles Corp. has total current assets of $11,666,000, current liabilities of $5,780,000 and a quick ratio of 0.84. What is its level of inventory?

  Calculate ebit-eps coordinates for each of the structures

Calculate two EBIT-EPS coordinates for each of the structures and indicate over what EBIT range, if any, each structure is preferred

  Is the variance different under these probabilities

Find a function ξ(Rt) such that under the density, ξ(Rt)f(Rt), Rt has a mean equal to the risk-free rate r = .05.(b) Find a ξ(Rt) such that Rt has mean zero.(c) Under which probability is it "easier" to calculate (d) Is the variance different under t..

  What is the most important benefit of the daily settlement

What is the value of gold futures contracts at the completion of their daily settlement today? What is the most important benefit of the daily settlement?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd