# Question: Assume that you have half of your money invested in

Assume that you have half of your money invested in Times Mirror, the media company, and the other half invested in Unilever, the consumer product giant. The expected returns and standard deviations on the two investments are summarized below:

Estimate the variance of the portfolio as a function of the correlation coefficient (start with −1 and increase the correlation to +1 in 0.2 increments).

Estimate the variance of the portfolio as a function of the correlation coefficient (start with −1 and increase the correlation to +1 in 0.2 increments).

**View Solution:**## Answer to relevant Questions

Assume that the average variance of return for an individual security is 50% and that the average covariance is 10%. What is the expected variance of a portfolio of 5, 10, 20, 50, and 100 securities. How many securities need ...You have just run a regression of monthly returns of American Airlines (AMR) against the S&P 500 over the past five years. You have misplaced some of the output and are trying to derive it from what you have. a. You know the ...As the result of stockholder pressure, RJR Nabisco is considering spinning off its food division. You have been asked to estimate the beta for the division and decide to do so by obtaining the beta of comparable publicly ...Novell, which had a market value of equity of $2 billion and a beta of 1.50, announced that it was acquiring WordPerfect, which had a market value of equity of $1 billion and a beta of 1.30. Neither firm had any debt in its ...You are analyzing an investment decision, in which you will have to make an initial investment of $10 million and you will be generating annual cash flows to the firm of $2 million every year, growing at 5% a year, ...Post your question