Find the mean and standard deviation of the total amount

Assignment Help Finance Basics
Reference no: EM131702895

An investor puts some money into each of two stocks labeled A and B: $500 in to stock A and $1000 in to stock B. The mean rates of return for the stocks are: Stock A = 0.15 and Stock B = 0.12. So, if one puts a dollar into stock A, the expected profit at the end of the year is $0.15. The standard deviations of the rates of returns are: Stock A = 0.05 and Stock B = 0.03.

a) Find the mean and standard deviation of the total amount the investor earns in one year, assuming the rates of return are independent random variables.

b) Find the mean and standard deviation of the total amount the investor makes in one year, assuming that the rates of return are positively correlated with a correlation coefficient of 0.5.

Reference no: EM131702895

Questions Cloud

What is the basis of differentiated appeal : How differentiated are the products or services of your company? What is the basis of their differentiated appeal?
Find the cumulative distribution function of x : The number of defects in a machine-made product is a random variable, X, with the following probability distribution:
Find the eigen values and eigen vectors of the matrix : Find the Eigen values and Eigen vectors of the matrix - Find the directional derivative and Gauss's divergence theorem for the function
Describe five conflict management style : The reading by Shearouse (2011) discusses five conflict management styles. Many companies sell conflict style questionnaires for use in organizations.
Find the mean and standard deviation of the total amount : Find the mean and standard deviation of the total amount the investor earns in one year, assuming the rates of return are independent random variables.
What are the maximum and minimum cycle times : An assembly line with 30 activities is to be balanced. What are the maximum and minimum cycle times? What is the production rate in units per day?
Discuss maintaining and enhancing our view of ourselves : How do cognitive biases involving the self contribute to the goal of maintaining and enhancing our view of ourselves
What proportion of traveler arrive at airport : Minutes travelers arrives at bus station normal disturbed at mean 80.5 standard deviation 9.9. What proportion of traveler arrive at airport
Discuss how could you explain your perceptions and judgments : Given your knowledge of social cognition (and despite the somewhat far-fetched nature of this scenario), how could you explain your perceptions and judgments

Reviews

Write a Review

Finance Basics Questions & Answers

  Write a short paragraph explaining your industry position

Assume that you are an industry analyst for manufacturers who build the capital equipment used in the manufacture of computer chips.

  Find or prepare the price earnings ratio

Find the financial statements for a publicly traded company, and examine its financial statements from the perspective of a potential investor. Find or prepare the price/earnings ratio, the dividend payout ratio, the dividend yield, book value

  10year conventional bonds and 10year inflation indexed bonds

For the most recent data, compare the rates on 10-year conventional bonds and 10-year inflation-indexed bonds. What do these rates tell us about expectations of future inflation?

  What forms of protection and regulation do regulators of fis

What are the differences between community banks, regional banks, and money-center banks? Contrast the business activities, location, and markets of each of these bank groups.

  Equipment show up on a profit and loss statement

Please explain where does the purchase of equipment show up on a profit and loss statement?

  Calculate the firms free cash flow

The following information is for a firm that has net debt on its balance sheet (in millions of dollars).

  For each of the following discuss the valuation formulas

for each of the following discuss the valuation formulas that are used to determine the value provide the common

  A estimate the value of nabor industriesentire company by

the firms weighted average cost of capital is 11 and has a 1500000 of debt at market value and 400000 of preferred

  What is the apr

Why is it important to avoid the minimum monthly payment trap?

  Is costco issuing new debt or are they liquid

Is Costco issuing new debt or are they liquid? Forecasting - Is Costco in a strong financial position with equity and assets? Stock/stockholder's equity - How much outstanding stock, is Costco heavily obligated to shareholders

  Ecology labs inc will pay a dividend of 640 per share in

ecology labs inc. will pay a dividend of 6.40 per share in the next 12 months d1. the required rate of return ke is 14

  What will the after-tax salvage value

The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?

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