Using the data in the following table,, consider a portfolio that maintains a 50% weight on...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Using the data in the following table,, consider a portfolio that maintains a 50% weight on stock A and a 50% weight on stock B a. What is the return each year of this portfolio? b. Based on your results from part (a), compute the average return and volatility of the portfolio. c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolio equals the same result as from the calculation in Eq. 11.8. d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks. a. What is the return each year of this portfolio? Enter the return of this portfolio for each year in the table below (Round to two decimal places.) Year Portfolio Data table 2010 % 2011 % 2012 % 2013 % (Click on the following icon in order to copy its contents into a spreadsheet.) 2014 2015 %1 1% Year 2010 2011 2012 2013 2014 2015 Stock A -10% 20% 5% 5% 2% 9% Stock B 21% 7% 30% -3% 8% 25% Print Done Using the data in the following table,, consider a portfolio that maintains a 50% weight on stock A and a 50% weight on stock B a. What is the return each year of this portfolio? b. Based on your results from part (a), compute the average return and volatility of the portfolio. c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolio equals the same result as from the calculation in Eq. 11.8. d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks. a. What is the return each year of this portfolio? Enter the return of this portfolio for each year in the table below (Round to two decimal places.) Year Portfolio Data table 2010 % 2011 % 2012 % 2013 % (Click on the following icon in order to copy its contents into a spreadsheet.) 2014 2015 %1 1% Year 2010 2011 2012 2013 2014 2015 Stock A -10% 20% 5% 5% 2% 9% Stock B 21% 7% 30% -3% 8% 25% Print Done
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Two basic assumptions of technical analysis are that security prices adjust: A. rapidly to new information and market prices are determined by the interaction of supply and demand. B. rapidly to new...
-
Analysis of growth, price-recovery, and productivity components (continuation of 13-16). An analysis of Ridgecrests operating-income changes between 2011 and 2012 shows the following: Operating...
-
On January 5, 2019, Phelps Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8% cumulative and non-participating preference shares, and 50,000 shares of $10...
-
The following cash flow information was taken from the 2015 annual report for Johnson & Johnson. Compute the missing values in the table (amounts are in millions). Based on this data, how does the...
-
Frozen North Outfitters Inc. makes thermal clothing for winter sports and outdoor work. It is considering acquiring Downhill Fashions Corp., which manufactures and sells ski clothing. Downhill is...
-
1 a) Your RRSP savings of $55,000 are converted to a RRIF at 5.75% compounded monthly that pays $5,300 at the beginning of every month. After how many payments will the fund be depleted? Round to the...
-
You were engaged to audit the books of Davao Company. From the records of the company, you gathered the following information: Estalaon Company started operations on October 2, 2018 with the owners...
-
How do you resize a report that would normally print on two pages so that it will fit on one page?
-
What is the Fixed Asset Manager?
-
Describe the information available in the sales by item report.
-
Describe the information available in the accounts receivable and accounts payable aging reports.
-
Discuss why percentage changes identified in the budgeted vs. actual reports need to be interpreted carefully.
-
Using exex Check the formulas for the other manufacturing tasks to ensure they are written correctly and that the worksheet can be easily updated later if any inputs change. The inputs are the...
-
Pearson Education, a publisher of college textbooks, would like to know if students prefer traditional textbooks or digital textbooks. A random sample of students was asked their preference and the...
-
Donald Winn and Judy Reed agreed to liquidate their partnership on June 30 of the current year. On that date, after financial statements were prepared and closing entries were posted, the general...
-
Theresa Doran and Roy Eden are partners in a business called D & E Sales. The partnership's work sheet for the year ended December 31 of the current year is provided in the Working Papers. ...
-
Brian Hughes and Wendy Perez formed a partnership five years ago. The partnership has been very successful and is growing rapidly. The partners are evaluating future actions for the next five years....
Study smarter with the SolutionInn App