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

Business plan, Identify and describe three types of start ups firms. Give a...

Identify and describe three types of start ups firms. Give an example of one you have dealt with. What is a business plan, what are its major components, and why is it important

Computation of value of the firm, Q. Computation of Value of the Firm? ...

Q. Computation of Value of the Firm? Computation of Value of the Firm (V) & Overall Cost of Capital:- NI                    = EBIT - Interest = 50,000 - 20,000 = 30,000

Operating cycle, disscus the applicability of operating cycle in vegetable ...

disscus the applicability of operating cycle in vegetable in uganda

Estimate the total rate of return, Question: Explain: (a) the advant...

Question: Explain: (a) the advantages and disadvantages, to a company, of debt finance over equity finance; (b) the reasons why a company may choose to issue preference s

Define arbitrage process, Q. Define Arbitrage Process ? The basic theor...

Q. Define Arbitrage Process ? The basic theory of the MM approach if we ignore the taxes is that the total value of a firm should be constant irrespective of the degree of leve

Hedge fund, Definition of 'Hedge Fund': An aggressively managed portfo...

Definition of 'Hedge Fund': An aggressively managed portfolio of investments that uses advanced investment strategies define as leveraged, short, long and derivative positions

Money market instruments, Just as any other financial market, money m...

Just as any other financial market, money market also involves transfer of funds in exchange for financial assets. Because of the nature of the money market, the

364-day t-bills, 364-Day T-Bills The Government considered that it is i...

364-Day T-Bills The Government considered that it is important to develop government securities market for monetary control. It also had an intention to ensure that government'

Specific cost of capital, Specific Cost of Capital When the Cost of ev...

Specific Cost of Capital When the Cost of every source of capital is individually calculated, it is known as Specific Cost of Capital example Cost of equity, cost of debt, etc

Measure of central tendency, One of the most important objectiv...

One of the most important objectives of statistical analysis is to get one single value that describes the characteristic of the entire mass of unwieldy

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