Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

There are three securities in the market. The following chart shows their possible payoffs:

State Probability of Return on Return on Return on
Outcome Security1 security2 Security3

1 .15 .25 .25 .10
2 .35 .20 .15 .15
3 .35 .15 .20 .20
4 .15 .10 .10 .25

a) What are the expected return and standard deviation of each security?

b) What are the covariances and correlations between the pairs of securities?

c) What are the expected return and standard deviation of a portfolio with half of its funds invested in security 1 and half in security 2?

d) What are the expected return and standard deviation of a portfolio with half of its funds invested in security 1 and half in security 3?

e) What are the expected return and standard deviation of a portfolio with half of its funds invested in security 2 and half in security 3?

f) What do your answers in parts (a), (c), (d), (e) imply about diversification?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M928721

Have any Question? 


Related Questions in Basic Finance

1 what are some impediments faced by communities wishing to

1. What are some impediments faced by communities wishing to perform hazard mitigation? 2. Name the primary federal mitigation programs, and explain how they serve to reduce hazard risk. 3. Do nonfederal mitigation progr ...

1 why can the current movement toward establishing supply

1. Why can the current movement toward establishing supply chains be characterized as a revolution? 2. Compare the concept of a modern supply chain with more traditional distribution channels. Be specific regarding simil ...

1 what is meant by value-added services why are these

1. What is meant by value-added services? Why are these services considered essential in a customer success program? 2. How could a company use the four-stage process of cost-effectiveness, market access, market extensio ...

Explain how you would conduct the study you designed in

Explain how you would conduct the study you designed in Question 1 as a matched-subjects design. Question 1 Design a randomized groups experiment to test the hypothesis that children who watch an hour-long violent televi ...

There are three 3 types of textbook based homework items

There are three (3) types of textbook based homework items located at the end of each chapter. These include Discussion Questions (DQ), Exercises (E), and Problems (P). Some homework items have been custom created. Compl ...

1 why should we be cautious about reports of research that

1. Why should we be cautious about reports of research that are published in the popular media and posted on the world wide web? 2. What are the three central characteristics of good writing? 3. Why should authors avoid ...

1 what are the main reasons that corporations may choose to

1. What are the main reasons that corporations may choose to own real estate? 2. Why is the value of corporate real estate often considered "hidden" from shareholders? 3. Why is the cost of financing with a sale-leasebac ...

What type of constraints may a client impose on a portfolio

What type of constraints may a client impose on a portfolio manager? If an investment in stock has a value of $3,000 at the beginning of the year and $3,500 at the end of the year, and paid a dividend of $250 at the end ...

In a column in the new york times harvard economist edward

In a column in the New York Times, Harvard economist Edward Glaeser argues: "Theory and data both predict that the 1.2 percentage point drop in real interest rates that America experienced between 1996 and 2006 should ca ...

Generate optimal code using two registers for each of the

Generate optimal code using two registers for each of the expressions of Exercise 8.10.1. Exercise Compute Ershov numbers for the following expressions:

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen