Perfectly negatively correlated and their standard deviation

Assignment Help Financial Management
Reference no: EM131057663

Stocks A and B are perfectly negatively correlated and their standard deviations are 0.20 and 0.30, respectively. What is the standard deviation of a portfolio with 50% invested in Stock A and 50% invested in Stock B?

Please show work & formula used

Reference no: EM131057663

Questions Cloud

Dividends are expected to grow : Dividends are expected to grow at a 25% rate for the next three years, with the growth rate falling off to a constant 7% thereafter. If the required return is 13% and the company just paid a $2.80 dividend, what is the current share price?
Issue of preferred stock outstanding : Moraine, Inc., has an issue of preferred stock outstanding that pays a $4.95 dividend every year in perpetuity. If this issue currently sells for $94 per share, what is the required return?
Divided between capital gains yield and dividend yield : Suppose you know that a company’s stock currently sells for $66 per share and the required return on the stock is 11 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. what ..
About the concerning bonds : Which of the following is FALSE concerning bonds?
Perfectly negatively correlated and their standard deviation : Stocks A and B are perfectly negatively correlated and their standard deviations are 0.20 and 0.30, respectively. What is the standard deviation of a portfolio with 50% invested in Stock A and 50% invested in Stock B?
Wisest path is to sell some stock to outside investors : Another three months have passed. You are now ready to expand to your sister city and you need more capital. You decide the wisest path is to sell some stock to outside investors, but you will maintain control over your company by holding onto the ma..
Identify futures commodity-exchange-stock or interest rate : Identify a futures commodity, exchange, stock, or interest rate. Use the internet to find a short history of the performance of this futures contract. Then research the possible reasons for this performance. What would you consider in investing in fu..
What proportion of your funds is invested in asset : You own two risky assets, both of which plot on the SML. Asset A has an expected return of 12.37% and a beta of 1.40. Asset B has an expected return of 14.13% and a beta of 1.65. If your portfolio beta is the same as the market portfolio, what propor..
What is the standard deviation of returns on the portfolio : You construct an equally weighted, two asset portfolio between ACME Corp, and American company, and Pocky Pies, a Korean company. The standard deviation of returns on ACME’s shares is 20% and 75% on Pocky. Because of international diversification, th..

Reviews

Write a Review

Financial Management Questions & Answers

  The deposit pays interest semi-annually

What APR is being earned on a deposit of $5,000 made 10 years ago today if the deposit is worth $9,948.94 today? The deposit pays interest semi-annually.

  Why might this not be the best capital structure

Tampa Manufacturing, an established producer of printing equipment, expects its sales to remain flat for the next 3 to 5 years because of both a weak economic outlook and an expectation of little new printing technology development over that period. ..

  Compensating balances are frequently part of revolving

Compensating balances are frequently a part of revolving lending arrangements with banks, yet they add to the cost of financing for the borrower. Why, then, would borrowers agree to such terms? What other types of alternative financing are available?

  Expected return on the risk free security

A friend says that she expects to earn 13.50% on her portfolio with a beta of 2.00. You have a two- asset portfolio including stock X and a risk free security. The expected return of stock X is 11.00% and the beta is 1.10. The expected return on the ..

  What factors account for apparent discrepancy in performance

The CEO has asked you to prepare a report on the situation. What factors (both within and outside of the firm) might account for this apparent discrepancy in performance?

  What is the annual dollar amount of interest

Assume that three years ago you purchased a corporate bond that pays 6.0 percent. The purchase price was $1070. What is the annual dollar amount of interest that you receive from your bond investment?

  What is the market value of preferred equity

How does a company raise money (capital) for their projects? KOOKIS, Inc., has 3M shares of common stock, $20 per share. What is the market value of common equity? The company has 1M shares of preferred stock, $10 per share. What is the market value ..

  Growth rate in earnings per share

10 years ago, Weed Go Inc. earned $0.98 per share. Its earnings this year were $2.01. What was the growth rate in earnings per share (EPS) over the 10-year period? State your answer as a percentage to two decimal places (e.g. 16.38%).

  Traditional land lines and have gone completely wireless

What is Apple’s stock (Iphones & Ipads) selling for now and how does it relate to their stock price 15 years ago? Would you be happier with a stock portfolio containing Apple and Motorola as opposed to Sprint and BellSouth?  How many of us have aband..

  A coin that is balanced should come up heads half the time

A coin that is balanced should come up heads half the time in the long run. A coin is tossed 4040 times and gives 2085 heads.

  What is new price of the bond

A company issues a 10 year bond on par with a coupon rate of 6.5% paid semi annually. The YTM at the beginning of the third year of the bond is 8.4% ( 8 YEARS LEFT TILL MATURITY). What is the new price of the bond?

  Fed changes the monetary policy

Suppose the Fed has just learned that the Treasury will need to borrow a larger amount of funds than originally expected. Explain how this information may affect the degree to which the Fed changes the monetary policy.

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