Table below shows the historical returns for Companies A, B and C Year 1 2 3...
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Table below shows the historical returns for Companies A, B and C Year 1 2 3 4 5 6 7 8 9 10 Company A Company B Company C 30% 26% 47% 7% 15% -54% 18% -14% -22% -15% -14% 2% 10% 26% -10% -3% 38% -18% 42% 30% -32% 28% 15% 7% -28% 40% 17% -23% -4% 75% 1. If one investor has a portfolio consisting of 50% Company A and 50% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk- free rate is 3.8%? 2. If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%? 3. What would happen to the portfolio risk if more and more randomly selected stocks were added? Table below shows the historical returns for Companies A, B and C Year 1 2 3 4 5 6 7 8 9 10 Company A Company B Company C 30% 26% 47% 7% 15% -54% 18% -14% -22% -15% -14% 2% 10% 26% -10% -3% 38% -18% 42% 30% -32% 28% 15% 7% -28% 40% 17% -23% -4% 75% 1. If one investor has a portfolio consisting of 50% Company A and 50% Company B, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk- free rate is 3.8%? 2. If another investor has a portfolio consisting of 1/3 Company A, 1/3 Company B and 1/3 Company C, what are the average portfolio return and standard deviation? What is Sharpe ratio if the risk-free rate is 3.8%? 3. What would happen to the portfolio risk if more and more randomly selected stocks were added?
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To calculate the average portfolio return and standard deviation for the given portfolios well use the historical returns provided Lets calculate the ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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