Variance comes from interaction component of total risk

Assignment Help Financial Management

Reference no: EM131597505

Security A Security B Expected return 15% 10% Standard Deviation 0.25 0.17 Beta 1.3 1.1 Correlation coefficient between A and B 0.5 Suppose you invest 30% of your money in Security A and the rest in Security B

a) What is the expected return of the portfolio?

b) What is the portfolio beta?

c) What is the portfolio variance? Compare it with A and B variances. Is the portfolio variance larger or smaller than either A or B variances and why?

d) What percentage of your portfolio variance comes from the “interaction” component of total risk?

Reference no: EM131597505

Questions Cloud

Type i and type ii errors : State in your own words what is meant by Type I and Type II errors. Why are these important

Stages of negotiations or in particular bargaining : What are the 4 stages of negotiations or in particular bargaining and Labor? This pertains to both sides of the bargaining, Labor and Management.

Ancova offers post hoc statistical control : Explain what is meant by the following statement: ANCOVA offers post hoc statistical control. Provide an example.

Reviewing communication theories : Begin by reviewing Communication theories to investigate whether any of these mass communication theories.

Variance comes from interaction component of total risk : What is the expected return of the portfolio? What percentage of your portfolio variance comes from the “interaction” component of total risk?

Basic of rapid demolition breach of contract claim : In Rapid Demolition Co. v. State of New York, what was the basic of Rapid Demolition's breach of contract claim? To what did they feel entitled to?

A section on implications and recommendation : A section on implications and recommendation.Describe the difference between these terms. Provide examples from one of the studies that you critiqued.

List the warning signs of substance abuse : List the warning signs of substance abuse. What should a company policy be about dealing with those warning signs?

Educational curriculum reinforces or challenges : We should be more sensitive to the ways that your educational curriculum reinforces or challenges your culture and cultural identity.

User Account

All Pages