Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is 0.4. The risk-free rate of return is 5%.

a. What is the proportion of the optimal risky portfolio that should be invested in stock B?
b. What is the expected return on the optimal risky portfolio?
c. What is the standard deviation of the returns on the optimal risky portfolio?
d. What is the proportion of the minimum variance portfolio that would be invested in stock B?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M927357

Have any Question? 


Related Questions in Basic Finance

Ethics and financethe sarbanes-oxley act of 2002 sox was

Ethics and Finance The Sarbanes-Oxley Act of 2002 (SOX) was passed as the result of the Enron scandal and other instances of accounting fraud. This act was passed to strengthen the role of the Securities and Exchange Com ...

Crypton electronics has a capital structure consisting of

Crypton Electronics has a capital structure consisting of 41% common stock and 59% debt. A debt issue of $100 0par value, 5.8% bonds that mature in 15years and pay annual interest will sell for $975. Common stock of the ...

Assume that the heights of men are normally distributed

Assume that the heights of men are normally distributed with a mean of 67.3 inches and a standard deviation of 3.5 inches. If 100 men are randomly selected, find the probability that they have a mean height greater than ...

1 distinguish between theory model and hypothesis2 describe

1. Distinguish between theory, model, and hypothesis. 2. Describe how researchers use induction versus deduction to generate research hypotheses. 3. Describe the process by which hypotheses are developed and tested.

Locate a newspaper or magazine article that reports a

Locate a newspaper or magazine article that reports a behavioral science research project. a. Determine whether the project is a descriptive, a correlational, or an experimental research design. b. What variables are mea ...

Specialty retailerwith this case we review the cash flow of

SPECIALTY RETAILER With this case, we review the cash flow of several specialty retail stores. The companies reviewed and the year-end dates are as follows: 1. Abercrombie & Fitch Co. (52-week fiscal year ended January 2 ...

1 what benefits do flexible unit-load materials have in

1. What benefits do flexible unit-load materials have in contrast to rigid containers? How do return or reverse logistics considerations impact the two approaches? 2. What trade-offs are involved in the use of returnable ...

1 the vinyl cd co is going to take on a project that is

1. The Vinyl CD Co. is going to take on a project that is expected to increase its EBIT by $80,000, its fixed cost cash expenditures by $125,000, and its depreciation and amortization by $75,000 next year. If the project ...

1 why is motor carrier freight transportation the most

1. Why is motor carrier freight transportation the most preferred method of product shipment? 2. What is the economic justification for the recent rapid growth of premium package services? 3. Why is it important for a lo ...

A large corporation is interested in determining whether an

A large corporation is interested in determining whether an association exists between the commuting time of its employees and the level of stress-related problems observed on the job. A study of 116 assembly-line worker ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro