Find the amount of stock b diversifiable risk

Assignment Help Finance Basics

Reference no: EM13293817

Suppose that two stocks, A and B, and the market portfolio, M, have the following characteristics: Corr(A,M) = 0.8; Corr(B,M) = 0.6; ?2M = 0.1225; ?2A = 0.0784 and ?2B = 0.090. The total value of the portfolio is $2,000 of which 2/3 is invested in Stock B. [Note: Corr ( ) = Correlation coefficient]

A. Find the beta of the portfolio formed of A and B. Please show work
B. Find the amount of Stock B's diversifiable risk. Please show work

Reference no: EM13293817

Questions Cloud

What is virtualization : What is virtualization and what are the benefits and tradeoffs and explain at least three common virtual technologies that are used.

Determine whether a three bit number is greater than another : determine whether a three bit number , a3,a2,a1 is equal to another number b3,b2,b1 or if it is greater than that number (We do not need an output for less than) a)Show how the 7485 would be connected to accomplish this.

How do their energy-consumption rates compare : An incandescent lightbulb draws 0.50 A, while a compact fluorescent with the same light output draws 125 mA. How do their energy-consumption rates compare

Compute direction of the net force that acts on the sailboat : A 315 kg sailboat has an acceleration of 0.72 m/s2 at an angle of 33° north of east. compute direction of the net force that acts on the sailboat

Find the amount of stock b diversifiable risk : Suppose that two stocks, A and B, and the market portfolio, M, have the following characteristics: Corr(A,M) = 0.8; Corr(B,M) = 0.6; ?2M = 0.1225; ?2A = 0.0784 and ?2B = 0.090. The total value of the portfolio is $2,000 of which 2/3 is invested in..

Associated with female athlete triad : Which following not good source of vitamin K. Which of following is not associated with female athlete triad

By what percent did the won devalue : Following the initial devaluation. what further percentage devaluation would be necessary for the won to equal its black market value?

Explain a concentrated solution is nitric acid in water : A concentrated solution is 68% nitric acid in water and has density of 1.39 g/ml. How many mL of this nitric solution will completely and exactly react with 143g of cu metal

Show a block diagram for the implementation : For the same functions,we have available as many of the decoders described below as needed plus 2 eight-input OR gates.Show a block diagram for this implementation. All inputs areavailable both uncomplemented and complemented.

User Account

All Pages