Correlation coefficient between them is zero

Assignment Help Business Economics
Reference no: EM131779424

Stock A has a required return of 10% and a standard deviation of 20%. Stock B has a required return of 13% and a standard deviation of 30%. The risk-free rate is 5% and the market risk premium is 6%.

Assume that the market is efficient. Portfolio AB has 50% invested in Stock A and 50% invested in Stock B. The returns of Stock A and Stock B are independent of one another, i.e., the correlation coefficient between them is zero, Which of the following is correct?

A. Stock A's Beta is 0.8333

B. Since the two stocks have zero correlation, portfolio AB is riskless

C. Stock B's Beta is 1.0

D. Portfolio AB 's required return is 11%.

Reference no: EM131779424

Questions Cloud

Explain the relevance of information to investors in cmbs : Since the beginning of 2009, there hasn't been a month when even half of the borrowers with CMBS loans reaching maturity were able to make their balloon.
Discuss health care reform in terms of ethical theories : Who should be trained in cultural competency and health literacy? Discuss health care reform in terms of ethical theories.
Define both internal and external economics of scale : Define both internal and external economics of scale. How do economies of scale play into trade between two countries with one factors of production?
Explain what is meant by a defeasance of loans : Kennett Square, Pa., June 21, 2010 - Chatham Financial announced today that it advised Primus Capital in the defeasance of $76.9 million in debt secured.
Correlation coefficient between them is zero : The returns of Stock A and Stock B are independent of one another, i.e., the correlation coefficient between them is zero, Which of the following is correct?
Discuss how much principal will the company plan to repay : How much will Austin Paints need to borrow from the bank at the beginning of March
Environmentally sustainable business practices : What is the essence of the business case for why a company should engage in socially responsible actions and environmentally sustainable business practices?
Explain the cross-collateralization features : Explain each of the following features and their significance in a single borrower/multiproperty CMBS transaction.
Write a five page essay about james m buchanan : Write a 5 page essay about James M. Buchanan, prominent economist, and novel laurete from FSU. Who he was? What he contributed Biography.

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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