Question: Consider two risky stocks. Stock A has an expected return of 13 percent and a standard deviation of 19. Stock B has an expected return

Consider two risky stocks. Stock A has an expected return of 13 percent and a standard deviation of 19. Stock B has an expected return of 14 percent and a standard deviation of 12 percent. The correlation coefficient between the two stocks is 0.9. What is the expected return of a portfolio where 40 percent of the capital is invested in stock A and 60 percent is invested in stock B?

		17.4
		15.8
		13.6
		17.0
		15.5

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!

Consider two risky stocks. Stock A has an expected return of 14 percent and a standard deviation of 15. Stock B has an expected return of 11 percent and a standard deviation of 14 percent. The...

1.Costlo Co. just paid total dividends of $174600 and reported additions to retained earnings of $349200. The company has 72600 shares of stock outstanding and a benchmark PE of 14 times. What stock...

Consider two risky stocks. Stock A has an expected return of 14 percent and a standard deviation of 14. Stock B has an expected return of 13 percent and a standard deviation of 20 percent. The...

Consider two risky stocks. Stock A has an expected return of 14 percent and a standard deviation of 14. Stock B has an expected return of 10 percent and a standard deviation of 14 percent. The...

Consider two risky stocks. Stock A has an expected return of 13 percent and a standard deviation of 15. Stock B has an expected return of 13 percent and a standard deviation of 12 percent. The...

NO EXPLANATION NEEDED - AS SOON AS POSSIBLE Save Answer Question 13 6.25 points Consider two risky stocks. Stock A has an expected return of 12 percent and a standard deviation of 18. Stock B has an...

Consider two risky stocks. Stock A has an expected return of 11 percent and a standard deviation of 14. Stock Bhas an expected return of 9 percent and a standard deviation of 17 percent. The...

4. Consider two risky stocks. Stock A has an expected return of 11 percent and a standard deviation of 13. Stock B has an expected return of 13 percent and a standard deviation of 14 percent. The...

Consider two risky stocks. Stock A has an expected return of 14 percent and a standard deviation of 15. Stock B has an expected return of 14 percent and a standard deviation of 16 percent. The...

Suppose there are two risky stocks. Stock one has an expected return of 10 % and a return standard deviation of 20 %. Stock 2 has an expected return of 5 % and a return standard deviation of 10 %....

Assume the facts in the preceding exercise, except that Zeile Company has chosen not to accrue paid sick leave until used, and has chosen to accrue vacation time at expected future rates of pay...

What is the maximum car payment and mortgage payment you can afford with the following conditions: your monthly household income, 12% for the car payment over 7 years, and 30% for the 17-year...

Given that the NYSE still maintains physical trading floors with human traders, what potential advantages or disadvantages do you think this hybrid trading model ( combining human and electronic...

Suppose that you would like to go on a trip in 5 years with current cost of 35,000 SEK. Assuming that you will need the same purchasing power in 5 years, how much money do you need to put in a bank...