Calculate the variance of a portfolio consisting

Assignment Help Financial Management
Reference no: EM13971866

Toyota has an expected return of 21%, and a variance of 0.014. Honda has an expected return of 19%, and a variance of 0.009. The covariance between Toyota and Honda is 0.05. Using these data, calculate the variance of a portfolio consisting of 50% Toyota and 50% Honda.

Reference no: EM13971866

Questions Cloud

Firms capital funding should be debt financing : McKnights Inc. uses a combination of common stock, preferred stock, and debt financing. The company wants preferred stock to represent 6 percent of the total financing. It also wants to structure the firm in a manner that will produce a weighted aver..
The cost of equity capital : Shelly's Inc. just paid an annual dividend of $1.63 per share. This dividend is expected to increase by 2.2 percent annually. Currently, the firm has a beta of 1.09 and a stock price of $27 a share. The risk-free rate is 4.7 percent and the market ra..
Financial analysts have estimated the returns on shares : Financial analysts have estimated the returns on shares of Drucker Corporation and the overall market portfolio under various economic conditions as follows. The analyst considers each state to be equally likely. Using these data, compute the beta of..
What is the variance of the stock : The return on shares of Valley Transporter is predicted under the following various economic conditions: If each economy state has the same probability of occurring, what is the variance of the stock?
Calculate the variance of a portfolio consisting : Toyota has an expected return of 21%, and a variance of 0.014. Honda has an expected return of 19%, and a variance of 0.009. The covariance between Toyota and Honda is 0.05. Using these data, calculate the variance of a portfolio consisting of 50% To..
Stock price has a variance of returns : Toyota Corp.'s stock price has a variance of returns of 0.0250. Honda Corp.'s stock has a variance of returns of 0.0505. The covariance between Toyota and Honda is 0.0255. What is the correlation coefficient between Toyota and Honda?
Present value of annuity : Assume payments are done at the begining of each year. Calculate the present value of annuity for:
Salary reconciliation as part of the budget approval process : Explain how you would present a salary reconciliation as part of the budget approval process for your own healthcare organization.
Finance committee when seeking approval for new fiscal year : Summarize the types of details would you present to the hospital board of directors finance committee when seeking approval for a new fiscal year budget? Your response must be at least 200 words in length.

Reviews

Write a Review

Financial Management Questions & Answers

  Asset are uncorrelated and both have sharpe ratio

Suppose asset A and asset B are uncorrelated and both have a Sharpe ratio of .4. Then a portfolio consisting of equal investment in asset A and asset B will also have a Sharpe ratio of .4. Glover Inc. has a WACC of .07 and a tax rate of .30. If it is..

  Depreciation for tax and stockholder reporting purposes

Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds outstanding that carry a 6.5% interest rate, and its federal-plus-state income tax..

  Hedge funds different from mutual funds

In what ways are hedge funds different from mutual funds?

  Government and corporate bond fund-T-bill money market fund

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 sure rate of 4.4%. What is the standard devia..

  How will the price of the preferred stock be affected?

X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $14 per share. With the passage of time, yields have soared from the original 12 percent to 16 percent (yield is the same as required rate of return). a. What was th..

  Draw single relational schema for the four user views

Merge the relations for the four user views into a single set of 3NF relations, using the guidelines presented in this chapter. Draw a single relational schema for the four user views and show the referential integrity constraints

  What is actual cost of the acquisition using company stock

Jackson C (JC). is being acquired by Sampson Security (SS) for $61,676 worth of SS stock. The incremental value of the acquisition is $5,600. JC has 2,942 shares of stock outstanding at a price of $20 a share. SS has 3,441 shares of stock outstanding..

  Preparing tax forma income statement

Connelly Corporation is a preparing a tax forma income statement for the 4th quarter. Solve for earnings after tax

  Issue zero coupon bonds on the market

Atlantis fisheries issue zero coupon bonds on the market at a price of $289 per bond each bond has a face value of $1000 payable at maturity in 20 years. What is the yield to maturity?

  Best estimate of the aftertax cost of debt

Shanken Corp. issued a 25-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 35 percent. What is your best estimate of the aftertax cost of debt?

  NPV under most optimistic projection of annual savings

If a better motor fluid is used, the capital cost will increase by 350, but fluid losses will be reduced through the 30 year life of the project. The optimistic, most likely, and pessimistic projections are 35, 30 and 23. All estimates are inflation ..

  Stock market consistently-what is the price

There is a stock, which will not pay dividends for 5 years. In year 6 it starts paying $2 annually for 4 years. After that time, it will increase its dividend by 3% yearly, and it expects to do that for 200 years. If you know, the risk premium is 7%,..

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