5. Mr. James wants to put all of his savings into a retirement fund which invests...

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5. Mr. James wants to put all of his savings into a retirement fund which invests in 2 stocks: Paragon Ltd and Rausing Corporation. It has been observed over the past year that the standard deviations of returns of Paragon Ltd and Rausing Corporation are 2% and 3%, respectively. Furthermore, the analysis of data of these stocks by the managers of the retirement fund showed that the correlation between these stocks is 0.9 and the correlation of these stocks with the portfolio is 0.6 for Paragon Ltd and 0.3 for Rausing Corporation. Given that the portfolio invests 30% in Paragon and 70% in Rausing Corporation, calculate the beta of both of these stocks. Beta A- Beta B- 5. Mr. James wants to put all of his savings into a retirement fund which invests in 2 stocks: Paragon Ltd and Rausing Corporation. It has been observed over the past year that the standard deviations of returns of Paragon Ltd and Rausing Corporation are 2% and 3%, respectively. Furthermore, the analysis of data of these stocks by the managers of the retirement fund showed that the correlation between these stocks is 0.9 and the correlation of these stocks with the portfolio is 0.6 for Paragon Ltd and 0.3 for Rausing Corporation. Given that the portfolio invests 30% in Paragon and 70% in Rausing Corporation, calculate the beta of both of these stocks. Beta A- Beta B-

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To calculate the betas of Paragon Ltd and Rausing Corporation we need to use the formula Beta Covari... View the full answer