The correlation coefficient between the returns

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Reference no: EM132000903

1. A portfolio is comprised of two stocks, A and B. Stock A has a standard deviation of return of 25% while stock B has a standard deviation of return of 5%. Stock A comprises 20% of the portfolio while stock B comprises 80% of the portfolio. If the variance of return on the portfolio is .0080, the correlation coefficient between the returns on A and B is __________.

A. -.975

B. -.025

C. .025

D. .975

2. A newly issued 20-year zero coupon bond just sold for $311.05. What is the implicit interest rate on the bond?

A. 5.52%

B. 6.01%

C. 6.50%

D. 5.92%

E. 6.25%

Please explain answer

Reference no: EM132000903

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