What is the weighted average portfolio return

Assignment Help Finance Basics
Reference no: EM13268329

Suppose you add a new stock to your portfolio. NewCo now accounts for 50% of your total portfolio. The expected dollar return on NewCO stck is 19% and its standard deviation is 30. Assuming that the new portfolio has a correlation coefficient of .3:

a) what is the weighted average portfolio return and standard deviation?
b) what is the real portfolio variance and standard deviation?
c) what happened to the portfolios returns and total risk with this new addition?
d) what accounts for this effect?

 

Reference no: EM13268329

Questions Cloud

What is the radiation pressure : A tungsten filament incandescent light bulb emits spherical electromagnetic waves of 50 Watts isotropically. What is the radiation pressure
What is the value of acmes interest tax shield : If Acme's free cash flow is expected to be $7 million next year and is expected to grow at a rate of 3% per year, what is Acme's WACC?
Find the total dissipated power if 3 resistors are identical : The power dissipated in the resistor R0 is 89 W when connected to a 10V source. Find the total dissipated power if 3 resistors identical to R0 are connected in series to a 10V source.
By how many meters will the reflected ray miss the detector : Suppose the mirror is misaligned, so that the actual angle between the normal to the surface and due south is too large by 0.003°. By how many meters (due east) will the reflected ray miss the detector
What is the weighted average portfolio return : Suppose you add a new stock to your portfolio. NewCo now accounts for 50% of your total portfolio. The expected dollar return on NewCO stck is 19% and its standard deviation is 30.
Calculate the dopant density represented by silicon cube : The silicon cube you were shown consisted of 4x4x4 unit cells. You were shown one dopant in the silicon cube. Given that the lattice constant of silicon is 0.543 nm. Calculate the dopant density represented by the 4x4x4 silicon cube simulation.
What is the amount of the last dividend paid by weisbro : Weisbro and Sons common stock sells for $24 a share and pays an annual dividend that increases by 4.9 percent annually. The market rate of return on this stock is 10.60 percent. What is the amount of the last dividend paid by Weisbro and Sons?
How old is luke when he returns : Luke and Leia are twins, and Luke immediately leaves after birth on a spaceship traveling at 65% of the speed of light, How old is Luke when he returns
What is the nominal rate of return on these bonds : The outstanding bonds of Roy Thomas, Inc. provide a real rate of return of 3.6 percent. The current rate of inflation is 2.1 percent. What is the nominal rate of return on these bonds?

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the component costs of debt

After collection all the information and prepares the following table - accordingly, compute the component costs of debt, preferred stock, and common stock.

  Construct an extended du pont equation

The Fern Furniture Corporation, a manufacturer and wholesaler of high-quality home furnishings, has been experiencing low profitability in recent years.

  Exploit the profitable arbitrage opportunity

How does your answer change if storage costs of 2% per annum are incurred? What is the profit (per ounce)?

  What is the cost of preferred stick for kyle

Wilson charges a fee of 3% on the sale of preferred stock. What is the cost of preferred stick for Kyle using the investment banker?

  How much will you have at the end of 10 years

Assuming your savings account returns 7 percent compounded annually, and your invest-ment in stocks will return 12 percent compounded annually, how much will you have at the end of 10 years? (Ignore taxes.)

  Describing the importance of the concept of present value

Describing the importance of the concept of present value therefore important for corporate finance and is often the very first topic taught in any finance class.

  Cost of equity capital using arithmetic average growth rate

If stock presently sells for= $50, what is your best estimate of company’s cost of equity capital by using arithmetic average growth rate in dividends?

  Estimate of the stocks required rate of return

Suppose you observe that the stock is selling for $50.00 per share, and that this is the best estimate of its equilibrium price. What would you conclude about either (i) your estimate of the stock's required rate of return; or (ii) the CFO's estim..

  Nominal interest rates-inflation and exchange rates

How much would you expect to receive for a nominal interest rate in Spain if funds can be invested in the U. S. at a rate of 7 % when inflation is expected to be 2.5 % in the U. S. and 7 % in Spain?

  Calculate the after-tax cost of bonds with warrants (t = 30

1. A 20-year bond comes with 25 warrants attached. Each warrant has a strike price (also called an exercise price) of $15 and 10 years until expiration. Each warrant's value is estimated to be $8. The cost of debt for a 20-year annual payment bond wi..

  What is the irr for this project

You will save $260,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $85,000 (this is a one-time reduction). If the tax rate is 30 percent, what is the IRR for this project.

  Calculate the amount of accrued interest on this bond

A $1000 par value bond has a coupon rate of 6 percent. The bond pays interest semiannually. Exactly 41 days have passed since the last coupon payment.

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