8 Consider the following expected annual returns and standard deviations Stock Expected Return Standard Deviation Boeing 4 7 9 9 Kroger 6 5 10 1 What would be the one year expected return and standard deviation of a portfolio that consists of 500 shares of Boeing and 1,000 shares of Kroger stocks Boeing trades at $205 06 a share and Kroger trades at $40 60 a share as of today Suppose the correlation coefficient between the annual stock returns of the two companies is 0 1 A Expected return 6 35 Standard deviation 13 70 B Expected return 6 21 Standard deviation 9 65 C Expected return 5 90 Standard deviation 7 20 D Expected return 5 13 Standard deviation 22 7 E Expected return 4 61 Standard deviation 6 19 F Expected return 5 21 Standard deviation 7 38 Compute the Sharpe Ratio for each of the following three assets (1) the Boeing stock (2) the Kroger stock (3) the portfolio discussed Use 1 as the risk free rate A Boeing 0 3325 Kroger 0 3832 Portfolio 0 5139 B Boeing 0 4925 Kroger 0 8832 Portfolio 0 3191 C Boeing 0 3333 Kroger 0 4138 Portfolio 0 5187 D Boeing 0 3333 Kroger 0 8832 Portfolio 0 2313 E Boeing 0 4925 Kroger 0 3862 Portfolio 0 3191 F Boeing 0 3737 Kroger 0 5445 Portfolio 0 5706

The Answer is in the image, click to view ...

Question: 8. Consider the following expected annual returns and standard deviations: Stock Expected Return Standard Deviation Boeing 4.7% 9.9% Kroger 6.5% 10.1% What would be the

8. Consider the following expected annual returns and standard deviations:

Stock	Expected Return	Standard Deviation
Boeing	4.7%	9.9%
Kroger	6.5%	10.1%

What would be the one-year expected return and standard deviation of a portfolio that consists of 500 shares of Boeing and 1,000 shares of Kroger stocks? Boeing trades at $205.06 a share and Kroger trades at $40.60 a share as of today. Suppose the correlation coefficient between the annual stock returns of the two companies is -0.1.

A. Expected return: 6.35%; Standard deviation: 13.70%
B. Expected return: 6.21%; Standard deviation: 9.65%
C. Expected return: 5.90%; Standard deviation: 7.20%
D. Expected return: 5.13%; Standard deviation: 22.7%
E. Expected return: 4.61%; Standard deviation: 6.19%
F. Expected return: 5.21%; Standard deviation: 7.38%

Compute the Sharpe Ratio for each of the following three assets: (1) the Boeing stock; (2) the Kroger stock; (3) the portfolio discussed. Use 1% as the risk free rate.

A.
Boeing: 0.3325; Kroger: 0.3832; Portfolio: 0.5139
B.
Boeing: 0.4925; Kroger: 0.8832; Portfolio: 0.3191
C.
Boeing: 0.3333; Kroger: 0.4138; Portfolio: 0.5187
D.
Boeing: 0.3333; Kroger: 0.8832; Portfolio: 0.2313
E.
Boeing: 0.4925; Kroger: 0.3862; Portfolio: 0.3191
F.
Boeing: 0.3737; Kroger: 0.5445; Portfolio: 0.5706

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

The Science Road Show (SRS) is a not-for-profit organization that puts on traveling science demonstrations throughout the state. SRS operates on a September 1-August 31 fiscal year. The organization...

Consider the following expected annual returns and standard deviations: Stock Expected Return Standard Deviation Boeing 5.5% 12.9% Nordstrom 7.2% 14.5% What would be the one-year expected return and...

Consider the following expected annual returns and standard deviations: Stock Expected Standard Return Deviation Boeing 4.7% 9.9% Kroger 6.5% 10.1% What would be the one-year expected return and...

1.3 (5 points) Two stocks have the following expected returns and standard deviations Stock Stock Expected return Standard Deviation A 10% 12% B 15% 20% Consider a portfolio of A and B, and let w,...

please answer as soon as possible. This is a short assignment. Just want to make sure the answers I figured out are correct. Questions 8,9 and 11 are free response (not multiple choice) those 3...

Assume that the CAPM holds. Consider a stock market that consints of only two risky securities, Slock 1 and Stock 2, with the following expected returns (u) and standard deviations of returns......

Assume that the CAPM holds. Consider a stock market that consists of only two risky securities, Stock 1 and Stock 2, with the following expected returns (u) and standard deviations of retums (o): u1...

Question 1 Assume that the CAPM holds. Consider a stock market that consists of only two risky securities, Stock 1 and Stock 2, with the following expected returns (1) and standard deviations of...

Question 1 Assume that the CAPM holds. Consider a stock market that consists of only two securities, Stock 1 and Stock 2, with the following expected returns (s) and standard deviations of retums (a)...

You are assessing internal control in the audit of the payroll and personnel cycle for Rogers Products Company, a manufacturing company specializing in assembling computer parts. Rogers employs...

A local fast-food store is considering accepting major credit cards in its outlets. Current annual sales are $800,000 per outlet. The company can purchase the equipment needed to handle credit cards...

23. Television means the electronic medium that keeps an entire nation of viewers in a state of seminarcosis by feeding them a steady stream of inane drivel. Determine whether the following defi...

Sarasota Company sells 10% bonds having a maturity value of $2,450,000 for $2,273,375. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1. Set...