Calculate the expected return and standard deviation, Financial Management

Benjamin Tang currently has holdings in the following three companies:

                                                                            E(R)                      σ                    β

Vivian Tam & Yuanyuan Wang Technologies (X)       14%                   16%                 2.0

Vivien Wang & Danny Dong Ltd. (Y)                        12%                   14%                 1.6

Omar Salahuddin & Philip Viegas Inc. (Z)                10%                   11%                 1.2

Coefficient of Correlation                                     ρxy = -0.4         ρxz = 0.6          ρyz = -0.7

a. What would be the expected return, standard deviation, and β for the following portfolios:

  Portfolio A                $20,000 in X and $30,000 in Y?

  Portfolio B                $35,000 in Y and $15,000 in Z?

Which one is the better portfolio and why?

b. Assuming normal distribution, determine the range within which approximately 95% of the portfolio A's returns will fall?

Posted Date: 4/5/2013 5:49:03 AM | Location : United States







Related Discussions:- Calculate the expected return and standard deviation, Assignment Help, Ask Question on Calculate the expected return and standard deviation, Get Answer, Expert's Help, Calculate the expected return and standard deviation Discussions

Write discussion on Calculate the expected return and standard deviation
Your posts are moderated
Related Questions
What factors would you consider in evaluating the political risk related with making FDI in a foreign country? Answer: Factors to be considered as follow: a) The host countr

These were first issued during a period of extreme interest rate volatility in the late 1970s. Floating-rate bonds, which are also known as variable-rate bonds or simpl

After the bid Tactics can be undertaken by directors to ensure that their shareholders don't accept the bid, if that is what they desire. Reject Share

What reasons do governments frequently give to justify the decision to not permit price to ration goods? (a) Price gouging is bad. (b) Income is unfairly distributed. (c) Some

Explain how to compute the overall balance and discuss its significance. The overall BOP is defined by computing the cumulative balance of payments involving the current account,

What are financial markets? Why do they exist? Ans: Financial markets are in which financial securities are bought and sold.  They be present primarily to bring deficit economi

Q. Explain Compound Value of an Annuity? Compound Value of an Annuity: - Annuity demotes to the periodic flows of equal amounts. FV = A {(1+i)n - 1}/i Instance: - Mr. X i

What is trustworthy collateral from the lenders' perspective?  Explain whether accounts receivable and inventory are trustworthy collateral. Assets which are readily marketable

Types of Government Stocks Issue of Stock through AuctionThe RBI, on behalf of the government, issues notification to auction government securities, stating the amount and time

1.How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit? 2. Suggestion regarding C