Assume we own two stocks; asset A and B. We have invested GHC12000 in asset A...
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Assume we own two stocks; asset A and B. We have invested GHC12000 in asset A and GHC 8000 in asset B. The return for asset A is 30% whilst that of B is 20%. The standard deviation for asset A is 15% whilst the standard deviation of asset B is 10%. The correlation between asset A and asset B is given as 0.70. Find the return on this portfolio Find the weighted standard deviation of this portfolio Find the standard deviation for this portfolio as proposed by Markowitz? What do you observe? •What will happen to the standard deviation of this portfolio if the correlation between these two assets is 0.40? •What will happen to this portfolio if the correlation is 1? What about if the correlation coefficient is -1? Assume we own two stocks; asset A and B. We have invested GHC12000 in asset A and GHC 8000 in asset B. The return for asset A is 30% whilst that of B is 20%. The standard deviation for asset A is 15% whilst the standard deviation of asset B is 10%. The correlation between asset A and asset B is given as 0.70. Find the return on this portfolio Find the weighted standard deviation of this portfolio Find the standard deviation for this portfolio as proposed by Markowitz? What do you observe? •What will happen to the standard deviation of this portfolio if the correlation between these two assets is 0.40? •What will happen to this portfolio if the correlation is 1? What about if the correlation coefficient is -1?
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Invest ER SD o Correlation r D StockA 12000 30 15 Return ... View the full answer
Related Book For
Managing Supply Chain and Operations An Integrative Approach
ISBN: 978-0132832403
1st edition
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
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