Calculate the expected return and standard deviation, Financial Management

Assignment Help:

Benjamin Tang currently has holdings in the following three companies:

                                                                            E(R)                      σ                    β

Vivian Tam & Yuanyuan Wang Technologies (X)       14%                   16%                 2.0

Vivien Wang & Danny Dong Ltd. (Y)                        12%                   14%                 1.6

Omar Salahuddin & Philip Viegas Inc. (Z)                10%                   11%                 1.2

Coefficient of Correlation                                     ρxy = -0.4         ρxz = 0.6          ρyz = -0.7

a. What would be the expected return, standard deviation, and β for the following portfolios:

  Portfolio A                $20,000 in X and $30,000 in Y?

  Portfolio B                $35,000 in Y and $15,000 in Z?

Which one is the better portfolio and why?

b. Assuming normal distribution, determine the range within which approximately 95% of the portfolio A's returns will fall?


Related Discussions:- Calculate the expected return and standard deviation

Derivatives, Derivatives - Financial instruments whose value varies with va...

Derivatives - Financial instruments whose value varies with value of an underlying asset (like a stock, BOND, commodity or currency) or index like interest rates. Financial instrum

Shareholders and auditors, agency relationship between shareholders and aud...

agency relationship between shareholders and auditors

Determine the method of credit rating, Determine the method of Credit Ratin...

Determine the method of Credit Rating It is obligatory for the issuing companies to get credit rating done on debt securities issues. Credit ratings are also required for Comme

What does high inflation have on the value of a business, What impact does ...

What impact does high inflation have on the value of a business? Besides causing distortion (as it unequally affects all goods and services), inflation enhances the uncertainty

Use of derivatives in equity portfolio management, Do you provide assignmen...

Do you provide assignment help on the topic Use of Derivatives in Equity Portfolio Management?

Clearing and settlement - t- bills, Clearing and Settlement The Treasur...

Clearing and Settlement The Treasury Bills are available in physical form if an investor desires so. The market is mostly dominated by institutional players who have a facility

Why depreciation play in estimating incremental cash flows, What role does ...

What role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and thus affects cash flow through its effect on taxes.

What is face value and par value, What is Face Value/ Par Value Value o...

What is Face Value/ Par Value Value of security as mentioned on certificate of the security.  Face values and par values are two terms that are used interchangeably.  Corporate

Traditional yield measures, Current Yield Current y...

Current Yield Current yield is defined as the annual coupon interest received on the market price.          Current Yield =

Define the risk of cost of capital, Risk of cost of capital A straight...

Risk of cost of capital A straightforward assumption of traditional cost of capital analysis is that firm's business and financial risk are unaffected by acceptance and financ

Write Your Message!

Captcha
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