Harry jones has invested onethird of his funds in share 1

Assignment Help Finance Basics
Reference no: EM13617027

Harry Jones has invested one?third of his funds in Share 1 & two?thirds of  his funds in Share 2. His assessment of each investment is as follows:     

  Item                                      Share 1             Share 2
Expected return (%)                    15.0                  21.0
Standard deviation (%)                18.0                  25.0
Correlation between the returns      .5  

(a) What are the expected return & the standard deviation of return on  Harry's portfolio?  

(b) Recalculate  the  expected  return  &  the  standard  deviation  where  the  correlation between the returns is 0 and 1.0, respectively.   

(c) Is Harry better or worse off as a result of investing in two securities  rather than in one security?

Reference no: EM13617027

Questions Cloud

Construct a 90 confidence interval to estimate the average : a random sample of 21 ncaa division i mens basketball games during the 2009-2010 season had an average attendance of
You are planning to make monthly deposits of 450 into a : you are planning to make monthly deposits of 450 into a retirement account that pays 8 percent interest compounded
Does this provide compelling evidence for concluding that : a manufacturer of nickel-hydrogen batteries randomly selects 100 nickel plates for test cells cycles them a specified
An 110 m 230 n uniform ladder rests against a smooth wall : an 11.0 m 230 n uniform ladder rests against a smooth wall. the coefficient of static friction between the ladder and
Harry jones has invested onethird of his funds in share 1 : harry jones has invested one?third of his funds in share 1 amp two?thirds ofnbspnbsphis funds in share 2. his
Can not answer because the test statistics also depends on : suppose we are testing the hypotheses h0 ? 100 and ha?lt 100. suppose the population variance is unknown. which sample
What is the distance of a sample of blood from the rotation : human blood contains plasma platelets and blood cells. to seperate the plasma from other components centrifugation is
How many elephants does the researcher need to weigh so : in a study of elephants a researcher wishes to determine the average weight of a certain subspecies of elephants. from
A motorcycle rider starts from rest and goes 375 rad : a motorcycle rider starts from rest and goes 3.75 rad counterclockwise around a circular track in 12.3 seconds.

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculation of operating cash flows

Calculation of operating cash flows and what were the firm's earnings before taxes

  Determine total profit margin and cash flow

Brandywine Homecare, a non-profit business, had revenues of 12 million dollar in 2007. Expenses other than depreciation totaled 75% of revenues, and depreciation expense was $1.5 million.

  Calculate the maximum amount for investment

An investment is expected to generate $2,000,000 every year for four (4) years. If the firm's cost of funds is 5 percent,

  What is the company expected growing rate

The company's retained earnings are adequate to provide the common equity portion of its capital budget. Its expected dividend next year (D1) is $3, and the current stock price is $35.

  Use the ebit-eps analysis to evaluate the two plans

This part of the project is to analyze the following capital structure plans. You will use the EBIT-EPS analysis to evaluate the two plans. One plan is all equity and one has debt and equity.

  What is difference between the spot and the forward markets

What is the difference between the spot and the forward markets. Why do investors or business managers need the forward markets.

  What portion of total payments made during the fourth year

You recently obtained a $135,000, 30-year mortgage with a nominal interest rate of 7.25%. Assume that payments are made a the end of each month. what portion of the total payments made during the fourth year will go towards the repayment of princi..

  The project has the same risk as necs existing businesses

national electric company nec is considering a 49 million project in its power systems division. tom edison the

  What is the incremental cost

Should Curtis make or buy the containers? What is the incremental cost (benefit) of buying the containers as opposed to making them?

  What is the yield to maturity of a corporate bond with 10

what is the yield to maturity of a corporate bond with 10 years to maturity a coupon rate of 6 per year a 1000 par

  Provide brief interpretations of your findings

Assume that Riskfree rate (Rf) = 3.5%, Expected market return (Rm) = 9.5%. Compute the Cost of Equity (Re) for each of the following companies. Provide brief interpretations of your findings. (Note that you can find Betas of these companies using the..

  Define the effects of competition on residual income

Define the effects of competition on residual income and the residual income valuation approach.

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