What is the volatility standard deviation of an equally

Assignment Help Finance Basics
Reference no: EM13496130

1.Suppose that the average stock has a volatility of 50%, and that the correlation between pairs of stocks is 20%. Estimate the volatility of an equally weighted portfolio with (a) 1 stock, (b) 30 stocks, (c) 1000 stocks.

2.What is the volatility (standard deviation) of an equally weighted portfolio of stocks within an industry in which the stocks have a volatility of 50% and a correlation of 40% as the portfolio becomes arbitrarily large?

3.Consider an equally weighted portfolio of stocks in which each stock has a volatility of 40%, and the correlation between each pair of stocks 20%.

a. What is the volatility of the portfolio as the number of stocks becomes arbitrarily large?

b. What is the average correlation of each stock with this large portfolio?

4.Stock A has a volatility of 65% and a correlation of 10% with your current portfolio. Stock B has a volatility of 30% and a correlation of 25% with your current portfolio. You currently hold both stocks. Which will increase the volatility of your portfolio: (i) selling a small amount of stock B and investing the proceeds in stock A, or (ii) selling a small amount of stock A and investing the proceeds in stock B?

Reference no: EM13496130

Questions Cloud

Promote anti-american propaganda : A Russian SVR agent has 45 million dollars which he can spend to bribe academics, politicians, and bloggers to spread disinformation and to promote anti-American propaganda
Calculate a 95% confidence interval : Calculate a 95% Confidence Interval
Mama stuffin is a popular food item during the fall : Mama's Stuffin' is a popular food item during the fall and winter months, but it is marginal in the spring and summer. Use the following demand forecasts and costs to determine which of the following production planning strategies is best for M..
A singapore edition of business times : In a Singapore Edition of Business Times, diamond pricing we explored. The price of a diamond is based on the diamond's weight, color, and clarity. A Simple random sample of 18 one-half-carat diamonds had the following prices, in dollar's
What is the volatility standard deviation of an equally : What is the volatility (standard deviation) of an equally weighted portfolio of stocks within an industry in which the stocks have a volatility of 50% and a correlation of 40% as the portfolio becomes arbitrarily large?
How many 3-level latin squares are possible : How many 3-level Latin Squares are possible? {A "different" Latin Square in this case is one that does not have the same exact set of 9 treatment combinations as another set of 9.} Provide proof (or, at least "support") for your answer.
Defines the boundary of the reject region : 1) The alternative hypothesis is a
The standard deviation of the mean weight : A government worker claims that the standard deviation of the mean weight of all US Postal Service shipments is 0.40 pounds. If a hypothesis test is performed, how should you interpret a decision
An automobile manufacturing plant : Seventy new jobs are opening up at an automobile manufacturing plant

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

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