Question: 1. Consider the two Stocks X and Y given in the table below and answer the following questions. (a) What are the expected returns on
1. Consider the two Stocks X and Y given in the table below and answer the following questions. (a) What are the expected returns on Stocks X and Y ?(b) What are the standard deviations of the returns on X and Y ?(c) Suppose an investor who has \(\$ 10,000\) to invest invested \(\$ 8,000\) in Stock \( X \) and \(\$ 2,000\) in Stock Y, what is the expected return on her portfolio? (d) If the one-year Canadian treasury bill currently yields \(2.5\%\), what is the risk premium for this investor's equity portfolio? 2. See the annual prices of Tesla stock below and determine the arithmetic average and geometric average annual returns. Consider a $10,000 portfolio with $6,000 in Mario Corp. and $4,000 in Luigi Ltd. and the relevant data are provided in the following table. a. Determine the expected return, variance, and standard deviation for the portfolio. b. How the portfolio should be reallocated to achieve a portfolio return of 30%? Determine the new weights of the two stocks in the portfolio. Draw the indifference curve in the expected return-standard deviation plane corresponding to a utility level of 0.10 for an investor with a risk aversion coefficient of 3. An investor invests in a risky portfolio and T-bills. The risk and returns of the assets are summarized in the table below. a. Determine the Capital Allocation Line supported by T-bills and the risky portfolio, show the intercept on the Y axis and slope of the line. b. If the investor's risk aversion coefficient is given, A=5, what are the weights of the risky portfolio and T-bills in his complete portfolio so he can maximize utility? c. What are the expected return and standard deviation of the returns on this investor's complete portfolio? See the attached Excel file "TD and Shopify Stock Prices" for the monthly stock prices for TD Bank and Shopify Inc. in US dollars in the past four years. a. Determine the monthly returns for the two stocks. b. Determine the arithmetic average, variance and standard deviation of the monthly returns on Shopify's stock. c. In Excel, find the covariance and correlation between the returns on the two stocks. An investor wants to see the diversification benefit of having two stocks instead of one in his portfolio, and the following table shows the characteristics of the two stocks. a. Assume different weights for the two stocks in the following table and the correlation bet. (can you answer questions 1-7 please
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