5. Mr. James wants to put all of his savings into a retirement fund which invests...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
5. Mr. James wants to put all of his savings into a retirement fund which invests in 2 stocks: Paragon Ltd and Rausing Corporation. It has been observed over the past year that the standard deviations of returns of Paragon Ltd and Rausing Corporation are 2% and 3%, respectively. Furthermore, the analysis of data of these stocks by the managers of the retirement fund showed that the correlation between these stocks is 0.9 and the correlation of these stocks with the portfolio is 0.6 for Paragon Ltd and 0.3 for Rausing Corporation. Given that the portfolio invests 30% in Paragon and 70% in Rausing Corporation, calculate the beta of both of these stocks. Beta A- Beta B- 5. Mr. James wants to put all of his savings into a retirement fund which invests in 2 stocks: Paragon Ltd and Rausing Corporation. It has been observed over the past year that the standard deviations of returns of Paragon Ltd and Rausing Corporation are 2% and 3%, respectively. Furthermore, the analysis of data of these stocks by the managers of the retirement fund showed that the correlation between these stocks is 0.9 and the correlation of these stocks with the portfolio is 0.6 for Paragon Ltd and 0.3 for Rausing Corporation. Given that the portfolio invests 30% in Paragon and 70% in Rausing Corporation, calculate the beta of both of these stocks. Beta A- Beta B-
Expert Answer:
Answer rating: 100% (QA)
To calculate the betas of Paragon Ltd and Rausing Corporation we need to use the formula Beta Covari... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Alluring Tackle, Inc.. a manufacturer of fishing equipment, makes the Bass Grabber, a type of fishing lure. The company would like to develop a prediction model that can be used to obtain point...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
A close company which prepares accounts to 31 March each year is owned and managed by a single shareholder/director who is not a Scottish taxpayer and who is paid a salary of 5,000 per month. In...
-
A square loop of wire of edge length a carries current i. Show that, at the center of the loop, the magnitude of the magnetic field produced by the current is B = 22 0 i/a.
-
What is the primary source document from which most shipping-related tests of controls evolve?
-
Use the data in Exercise 25 in Section 13.1 for the following. a. Compute a point estimate for the mean vertical expansion at locations where the horizontal expansion is 25. b. Construct a 99%...
-
The following data relate to the operations of Slick Software, Inc., during 2011. Continuing operations: Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
-
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 15%. After careful study, Oakmont estimated the following costs and...
-
Total 40 marks FIN 222 US Pizza is one of those foods with which Americans have an abiding love affair. It is also one that lends itself to all sorts of variations. It was started in the 1990s by...
-
The Ira Company has sales of $860,000, and the break-even point in sales dollars is $619,200. Determine the company's margin of safety as a percent of current sales. Enter your answer rounded to one...
-
Why is paying attention to an interviewers verbal and nonverbal cues as important as responding to questions?
-
Discuss why it could be useful to look for stepping-stone opportunities alongside specific job positions. Explain your answer.
-
How can design consistency be useful in the setting of presentations of company products and branding to customers?
-
Assume you are a news anchor for a television channel presenting election results from different states or districts as well as tweets from your viewers. Would a linear or a nonlinear presentation be...
-
Students may well be asked to discuss their leisure pursuits during selection processes. Your task: Prepare a brief presentation about one of your leisure pursuits. Your purpose should be to...
-
Terra, Inc., a New York sweater manufacturing company, orally placed an order for fabrics with Yarner, Inc. (also a New York-based business) and then sent to Yarner a purchase order, which did not...
-
You are standing on the top of a building and throw a ball vertically upward. After 2 seconds, the ball passes you on the way down, and 2 seconds after that, it hits the ground below. a. What is the...
-
Define and describe the call feature on a bond.
-
What is a registered retirement savings plan (RRSP)? Describe the tax treatment for deposits and withdrawals.
-
The couple have asked you to determine their mortgage payment for both scenarios. How many years would they save off their mortgage, and how much mortgage interest would they save? Use this...
-
A reverted gear train is one in which the output shaft and input shaft? (a) rotate in opposite directions (b) are co-axial (c) are at right angles to each other (d) are at an angle to each other.
-
Which of the following pair \((s)\) is/are correctly matched? I. Four bar chain Oscillating-oscillating converter II. Inertia governor Rate of change of engine speed III. Hammer blow Reciprocating...
-
Two geared shafts \(A\) and \(B\) having moments of inertia \(I_{a}\) and \(I_{b}\) and angular acceleration \(\alpha_{a}\) and \(\alpha_{b}\) respectively are meshed together. \(B\) rotates at \(G\)...
Study smarter with the SolutionInn App