Two-asset portfolio-what is the expected return of portfolio

Assignment Help Financial Management
Reference no: EM131442480

Two-Asset Portfolio

Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 17% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2.

What is the expected return of a portfolio invested 25% in Stock A and 75% in Stock B? Round your answer to two decimal places.

______ %

What is the standard deviation of a portfolio invested 25% in Stock A and 75% in Stock B? Round your answer to two decimal places.

______ %

Reference no: EM131442480

Questions Cloud

Real risk-free rate of interest : Currently, Treasury bills are yielding 4.5% and the future inflation rate is expected to be 2.1% per year. Ignoring the cross product between the real rate of interest and the inflation rate, what is the real risk-free rate of interest?
Do you think you can prepare another presentation for team : The team returned and discussed their ideas about the budget impacts on the project scope. The brainstorming session went very well, with a lot of input from the entire team. You now have more than enough project cost information to share with Sam..
Standard deviation of stock returns for stock : The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 24%. If the correlation between Stock A and the market is 0.70, then what is Stock A's beta?
Define state and local taxation : Many of the issues of state and local taxation are similar to issues that arise in international contexts. Many countries, for instance, have imposed taxes on capital owned by foreigners. Discuss the incidence of such taxes. Does it pay to subsidi..
Two-asset portfolio-what is the expected return of portfolio : Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 17% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invest..
What is meant by a products contribution margin ratio : Discussion Problem- What is meant by a product's contribution margin ratio? How is this ratio useful in planning business operations?
Evaluate the effects of aging on cognitive development : Create a news release for your community to discuss the effects of aging on cognitive development. Your article should be 750 to 1,000 words. Address the following: Evaluate the effects of aging on cognitive development.
What is the portfolios beta : Your investment club has only two stocks in its portfolio. $35,000 is invested in a stock with a beta of 0.7, and $70,000 is invested in a stock with a beta of 1.8. What is the portfolio's beta?
Explain the limitations of a cvp analysis in given situation : Explain how a CVP analysis would be useful for determining whether or not the investment is worth it. Also, explain the limitations of a CVP analysis in this situation and for making managerial decisions in general.

Reviews

Write a Review

Financial Management Questions & Answers

  What will be the present worth of the money in your account

Assume that you open a savings account that accrues 3% nominal annual interest that is compounded monthly. Initially, your account has no funds in it. Starting next month, you add $50 / month for 6 months. Then, you increase your monthly deposit by $..

  A firm decides to use debt to raise its return on equity

A firm decides to use debt to raise its return on equity. It currently has sales of $2 million, total assets of $1 million and a debt ratio of 20%. It's net profit margin has been 10% and it expects it to stay there into the future. If it borrows an ..

  What are the cash flows-cds agreement

Suppose Bob holds a 10-year bond issued by company XYZ with a par value of $1,000 and a coupon interest amount of $100 each year. Fearful that XYZ will default on its bond obligations, what are the cash flows to bob for years 0 through 4 from the cds..

  Issue of preferred stock outstanding

Rabie, Inc., has an issue of preferred stock outstanding that pays a $5.00 dividend every year, in perpetuity. If this issue currently sells for $80.10 per share, what is the required return?

  Provide a detailed description of the firms

Provide a detailed description of the firms-  Describe their primary activities and markets - Provide a three year ratio analysis with the financial statement - balance sheets, income statement, cash flow.

  Sells extended warranties for durable consumer goods

Internal rate of return Peace of Mind, Inc. (PMI), sells extended warranties for durable consumer goods such as washing machines and refrigerators. When PMI sells an extended warranty, it receives cash up front from the customer, but later PMI must c..

  To calculate the number of years until maturity

To calculate the number of years until maturity, assume that it is currently January 15, 2013. Company (Ticker) Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Xenon, Inc. (XIC) 5.500 Jan 15, 2021 94.193 ? 57,363 Kenny Corp. (KCC) 7.130 Jan 1..

  Heat exchangers cost-fixed capital investment

Zach’s senior design project had a total purchased equipment cost of $3,487,000. The heat exchangers cost $178,000, the field fabricated vessels cost $676,600, pumps plus drivers cost $28,000, and the column shells cost $295,000. Purchased equipment ..

  Mainlines net income-total profit margin and cash flow

Assume that Mainline Homecare, a for-profit corporation, had exactly the same situation as reported earlier (Brandywine Homecare, a not-for-profit business, had revenues of $12 million in 2011. What were Mainlines' net income, total profit margin, an..

  Valuation of declining growth stock

Martell Mining Company's ore reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 7% pe..

  Orecasted the growth rates for the next three years

ProCor, a biotech firm, forecasted the following growth rates for the next three years: 35 percent, 28 percent, and 22 percent. The company then expects to grow at a constant rate of 9 percent forever. The company paid a dividend of $1.54 last week. ..

  Compute the materials price variance

Prepare a schedule of cash collections for May through July and compute the materials price variance and the materials quantity variance.

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