Portfolio Variance Outcomes Boom Normal Bust Probability(p) 0.2 0.5 0.3 rx 40% 26% -10% Wx= E(rp)...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Portfolio Variance Outcomes Boom Normal Bust Probability(p) 0.2 0.5 0.3 rx 40% 26% -10% Wx= E(rp) = W₂E(r.) + W,E(r.) ry 50% 34% -20% E(r) = 18%, E(ry) = 21% ■ Suppose the current market prices of stocks X and Y are $20 and $50, respectively. You plan to purchase 20,000 shares of X and 12,000 shares of Y. Corr(r,,ry) is estimated to be 20%. Wy= Portfolio Variance Outcomes Boom Normal Bust Probability(p) 0.2 0.5 0.3 rx 40% 26% -10% Wx= E(rp) = W₂E(r.) + W,E(r.) ry 50% 34% -20% E(r) = 18%, E(ry) = 21% ■ Suppose the current market prices of stocks X and Y are $20 and $50, respectively. You plan to purchase 20,000 shares of X and 12,000 shares of Y. Corr(r,,ry) is estimated to be 20%. Wy=
Expert Answer:
Answer rating: 100% (QA)
ANS WER W x 20 000 32 000 0 625 W y 12 000 32 000 0 375 E r p 0 625 18 0 375 21 19 125 EX PL AN ... View the full answer
Related Book For
Quantitative Analysis for Management
ISBN: 978-0132149112
11th Edition
Authors: Barry render, Ralph m. stair, Michael e. Hanna
Posted Date:
Students also viewed these accounting questions
-
The required returns of Stocks X and Y are rX = 10% and rY = 12%. Which of the following statements is correct? a) If the market is in equilibrium, and if Stock Y has the lower expected dividend...
-
Suppose that X and Y are distributed bivariate normal with density given in Equation (17.38). a. Show that the density of Y given X = x can be written as where b. Use the result in part (a) to show...
-
You plan to purchase a $ 100,000 house using a 30-year mortgage obtained from your local credit union. The mortgage rate offered to you is 8.25 percent. You will make a down payment of 20 percent of...
-
Which of the following is not necessary to do before you can run a Java program? a. Coding b. Compiling c. Debugging d. Saving
-
Alternate cost structures, uncertainty, and sensitivity analysis. Edible Bouquets (EB) makes and sells flower bouquets. EB is considering opening a new store in the local mall. The mall has several...
-
The following is taken from the Colaw SA statement of financial position. Interest is payable annually on January 1. The bonds are callable on any annual interest date. Colaw uses straight-line...
-
Consider a bank extending similar loans to people in two identical villages, each comprised of 100 households. All households in both villages are identical, and each loan is worth \($100.\) With a...
-
A retail company operates two types of clothing stores in shopping malls. One type specializes in clothes for men, and the other in clothes for women. The sales from a mens clothing store average...
-
Find the area of the figure. 15 cm 15 cm 17 cm 8 cm
-
ZIM Inc. (ZIM) is a high-technology company that develops, designs, and manufactures telecommunications equipment. ZIM was founded in Year 5 by Dr. Alex Zimmer, the former assistant head of research...
-
After completing the reading assignment " Competitive Benchmarking" Please answer the below questions. Please discuss with at least one other student. What are the factors that influence market...
-
Purchases of raw materials Indirect materials used in production Direct labor Manufacturing overhead applied to work in process Underapplied overhead $ 30,000 $ 4,510 $ 58,000 $ 88,100 $ 4,100...
-
Discuss the role of hybridity in Chinua Achebe's "Things Fall Apart." How does Achebe use this concept to depict the impact of colonialism on indigenous cultures and the struggle for identity ?
-
Townsend Produce agrees to sell 100 crates of lettuce to Metro Grocers under a shipment contract. Townsend arranges for Excel Transport to pick up and deliver the lettuce, which Excel Transport does....
-
One of the concepts involved in buying a business is conducting due diligence. From the text reading and your own research, describe what factors should be considered to constitute due diligence....
-
We are evaluating a project that costs $670,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at...
-
long call option for KLECHEY Ltd shares is provided: Long call option (KLECHEY Ltd shares) Strike price : R30 Premium : R3 a) Calculate the break-even point of the long call option for KLECHEY Ltd...
-
Q1) What is the a3 Value Q2) What is the a7 Value Q3) What is the a4 Value Q4) What is the b3 Value Q5) What is the b2 Value Q6) What is the sign of 2nd constraint? A pastry chef at a bakery wants to...
-
A pharmaceutical firm is about to begin production of three new drugs. An objective function designed to minimize ingredient costs and three production constraints are as follows: Maximize profit =...
-
Kitty Products caters to the growing market for cat supplies, with a full line of products, ranging from litter to toys to flea powder. One of its newer products, a tube of fluid that prevents hair...
-
Western Ranchman outfitters (WRO), a family-owned and operated mail order and retail store business in Cheyenne, Wyoming, bills itself as "The Nation's Finest Western Store" and carries high-quality...
-
Jim Logan, owner of the Sports Exports Company, is concerned about the value of the British pound over time because his firm receives pounds as payment for footballs exported to the United Kingdom....
-
Recall that Blades, the U.S. manufacturer of roller blades, generates most of its revenue and incurs most of its expenses in the United States. However, the company has recently begun exporting...
-
Explain the conditions that will result in various forms of international arbitrage and the realignments that will occur in response, and
Study smarter with the SolutionInn App