1) You wish to invest all your wealth in a portfolio containing just two assets, Alpha...
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1) You wish to invest all your wealth in a portfolio containing just two assets, Alpha Ltd and Beta Ltd. The companies have the following characteristics; Alpha has an expected return of 20% and standard deviation 30% and Beta has an expected return of 12% and standard deviation of 15%. The correlation between the two assets is 0.1. What investment proportions would be held in these two stocks, in order to achieve the minimum-variance portfolio and what would be the expected value and standard deviation of this portfolios rate of return? 2) What issues are important when considering the use of fundamental and technical analysis to value a company shares? In your opinion, does fundamental and technical analysis in general relate to the understanding of the efficient market hypothesis and portfolio theory? Discuss in detail and use examples to support your analysis. 1) You wish to invest all your wealth in a portfolio containing just two assets, Alpha Ltd and Beta Ltd. The companies have the following characteristics; Alpha has an expected return of 20% and standard deviation 30% and Beta has an expected return of 12% and standard deviation of 15%. The correlation between the two assets is 0.1. What investment proportions would be held in these two stocks, in order to achieve the minimum-variance portfolio and what would be the expected value and standard deviation of this portfolios rate of return? 2) What issues are important when considering the use of fundamental and technical analysis to value a company shares? In your opinion, does fundamental and technical analysis in general relate to the understanding of the efficient market hypothesis and portfolio theory? Discuss in detail and use examples to support your analysis.
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1 To find the minimum variance portfolio Let x proportion invested in Alpha 1x proportion invested i... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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