Portfolio of two stocks has smallest possible volatility

Assignment Help Financial Management
Reference no: EM131517704

Suppose Tex stock has a volatility of 44 % and Mex stock has a volatility of 20 %. If Tex and Mex are uncorrelated,

a. Construct a portfolio with positive weights in both stocks and that has the same volatility as MEX alone.

The portfolio of the two stocks that has the same volatility as Mex alone consists of % of Tex stock and % of Mex stock. (Round to one decimal place.)

b. What portfolio of the two stocks has the smallest possible volatility?

Reference no: EM131517704

Questions Cloud

Final case study and strategic plan : Read What's Driving Porsche? And History of Porsche AG - FundingUniverse. From the perspective of an executive with the firm, prepare a strategic plan.
What is expected return-volatility of portfolio consisting : What is the expected return and volatility of a portfolio consisting of 69 % Ford Motor stock and 31 % of Molson Coors Brewing? stock?
Write clearly and concisely about long-term care management : Assess the immediate staffing needs at BNH. Write clearly and concisely about long-term care management using proper writing mechanics
Determine the total estimated cost of project : A contractor has a contract to remove and replace the existing landscape and sidewalks around an office building. The work includes demolition of the existing.
Portfolio of two stocks has smallest possible volatility : What portfolio of the two stocks has the smallest possible volatility?
Mergers fail to produce value for shareholders of acquirers : Mergers fail to produce value for shareholders of acquirers in many cases. Describe and explain some reasons for mergers failure.
What cultural relativism requires of us : What cultural relativism requires of us is simply that we do not confuse our own feelings about such a custom with understanding it.
What should a diversity training program include : What should a diversity training program include? Discuss the content and how it could be assessed.
What is the current intrinsic value of marine oils stock : What are Marine Oils’ cost of equity and weighted average cost of capital? What is the current intrinsic value of Marine Oils’ stock?

Reviews

Write a Review

Financial Management Questions & Answers

  Financial forecast generates worst negative cash position

Your three-year financial forecast generates a worst negative cash position of negative $625,000. Uncle John has committed to investing $250K. Given that, and the following facts, how much additional capital (beyond Uncle John’s $250K) do you need to..

  Breakeven analysis is one of simplest underused analytical

Breakeven analysis is one of the simplest yet underused analytical tools in management. It helps to provide a dynamic view of the relationships among sales, costs, and profits. The formula for calculating breakeven point is BE Quantity = TFC/P-VC. In..

  Bonds make semiannual payments-current bond price

App Store Co. issued 13-year bonds one year ago at a coupon rate of 8 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.7 percent, what is the current bond price?

  Compute the apv then compute the capital structure in ratios

First compute the APV, then compute the capital structure in ratios, and finally show that the WACC yields the same result.

  What rate would you expect to see on a treasury bill

Suppose the real rate is 3.4 percent and the inflation rate is 5.0 percent. What rate would you expect to see on a Treasury bill?

  What is the minimum line of credit that cbm will need

Will the company need any outside financing? What is the minimum line of credit that CBM will need? What do you think of CBM's cash position during the budget period?

  What is jacobs present equivalent cost of leasing

The Jacob Company needs to acquire a new lift truck for transporting its final product to the warehouse. What is Jacob’s present equivalent cost of leasing?

  What would payments if be monthly amortization were required

Suppose that you and your brother want to purchase 25 acres of land to start a Christmas tree farm. The owner is willing to finance 75 percent of the $100,000 purchase price at 12 percent annual interest with amortization over 8 years. What will be t..

  What is the real risk-free rate of return

You read in The Wall Street Journal that 30-day T-bills are currently yielding 5%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums: Inflation premium = 3% Liquidity p..

  Finding the required interest rate

Your parents will retire in 20 years. They currently have $320,000, and they think they will need $2,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer..

  Prepare a capital cost allowance schedule

The IDID It Corporation has just purchased a round-tuit at a cost of $1,000,000. The asset is recorded in an asset class that uses a CCA rate of 20 percent and this is the only asset in the class. Prepare a capital cost allowance schedule for the fir..

  Identify the generally accepted accounting principles

Identify the Generally Accepted Accounting Principles used to create a financial plan. Explain the relevance of each Generally Accepted Accounting Principles to the financial plan.

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