An investor has 800 000 TL to invest. He invests 600 000 TL in stock A...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
An investor has 800 000 TL to invest. He invests 600 000 TL in stock A which has variance of %12,5 and expected return of 0,25. He considers to invest the rest in Stock B. Stock B has variance of %25 and expected return 0,6. The correlation coefficient between A and B is 0,45. a) Calculate the expected return and standard deviation of a portfolio that includes A and B stocks. b) Is there a way to reduce systematic risk of this portfolio? If, explain briefly. An investor has 800 000 TL to invest. He invests 600 000 TL in stock A which has variance of %12,5 and expected return of 0,25. He considers to invest the rest in Stock B. Stock B has variance of %25 and expected return 0,6. The correlation coefficient between A and B is 0,45. a) Calculate the expected return and standard deviation of a portfolio that includes A and B stocks. b) Is there a way to reduce systematic risk of this portfolio? If, explain briefly.
Expert Answer:
Answer rating: 100% (QA)
To calculate the expected return and standard deviation of the portfolio that includes stocks A and ... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
Students also viewed these finance questions
-
An investor has £100,000 to invest in shares of Trent or Severn the expected returns and standard deviations of which are as follows. The correlation coefficient between those two shares is...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
(2) Write an 8086-assembly code to control the interrupt of (3) stepper motors and (2) servo motors in which each motor has its interrupt. The buffered mode for master was required with normal end of...
-
A tube 1.20 m long is closed at one end. A stretched wire is placed near the open end. The wire is 0.330 m long and has a mass of 9.60 g. It is fixed at both ends and oscillates in its fundamental...
-
Calculate the acentric factor for ethanol. The vapour pressure of ethanol can be estimated from the following equation: \[ \log _{10} P^{\text {Sat }}=8.1122-\frac{1592.864}{t+226.184} \] where...
-
Using the following data for Evans \& Sons, calculate the cash paid for rent: Rent expense... $80,000 Prepaid rent, January 1 10,000 Prepaid rent, December 31 8,000
-
You buy 100 shares in a no-load mutual fund at its net asset value of $10. During the year, the mutual fund distributes $0.75 in dividends. You redeem the shares for their net asset value of $12.03,...
-
You invest an initial $4,500 in an account that has an annual interest rate of 4.5%, compounded daily. How much money will you have in the account after 10 years? Round your answer to the nearest...
-
Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique?s demand curve, marginal revenue curve (MR), marginal cost curve...
-
Waterways markets a simple water control and timer that it mass produces Last year, the company sold 7 3 5 , 0 0 0 units at an average unit selling price of $ 3 . 6 0 . The vairable costs were $ 1 ,...
-
Garrett Augustus Morgan, Lewis Howard Latimore, and George Washington Carver are partners in a business called NventionsMLC. In 2017, Sterling Archer and Lana Kane were hired to develop and procure...
-
Q1. (5 points) A stock's price-earnings (P/E) ratio is the per-share price of its stock divided by the company's annual profit per share. The P/E ratio for the stock market as a whole is used by some...
-
You have been asked by your company to evaluate the proposed acquisition of new equipment. The equipment's price is $140,000, and It will cost another $30,000 to modify it for special use by the...
-
Ceiling Stars, Inc., manufactures light bulbs. Its purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the Purchasing...
-
Why is test anxiety a good thing? What are the three fears that cause anxiety? How do overcome these fears? What are some activities you can do to reduce test anxiety? Should you entirely deal with...
-
Man - A - Shev - Its manufactures decorative iron railings. In preparing for 2 0 2 4 s operations, management has developed the following estimates: Total Per UnitSales ( 2 0 , 0 0 0 units ) $ 1 , 0...
-
d) For die casting processes: 1. What are the most common metals processed using die casting and discuss why other metals are not commonly die casted? 2. Which die casting machines usually have a...
-
In exercise 18.11 we analyzed the impact of rent control policies that impose a price ceiling in the housing rental market. The stated intent of such policies is often to make housing more...
-
In this exercise we review some basics of attitudes toward risk when tastes are state-independent and, in part B, we also verify some of the numbers that appear in the graphs of part A of the chapter...
-
Consider again, as in exercise 15.5, the problem faced by a society that wants to both maximize efficiency and achieve some notion of equity. A: Suppose again that everyone has tastes over x and a...
-
What is the usual liability of stockholders for corporation actions? a. Unlimited b. Limited to the par value or stated value of the shares of stock they hold c. Limited to the amount of their...
-
Which type of stock may have dividends in arrears? a. Cumulative preferred stock b. Common stock c. Noncumulative preferred stock d. Treasury stock
-
Wyler Company issued 20,000 shares of \(\$ 10\) par value common stock in exchange for a building with a current fair value of \(\$ 1,000,000\). In recording this transaction, what amount should be...
Study smarter with the SolutionInn App