Stock A has an expected return of 18% and a standard deviation of 38%. Stock B...
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Stock A has an expected return of 18% and a standard deviation of 38%. Stock B has an expected return of 14% and a standard deviation of 21%. The correlation coefficient between two stocks is negative 0.4. The risk-free rate is 8%. (Do not round intermediate calculations. Round your final answers to 2 decimal places. (e.g., 0.9635 would be entered as 0.96)) a) Calculate the Sharpe ratio for the two stocks. Stock A b) Assume that you can invest in both of these assets in portfolio C. How much should you invest in stock A and stock B to obtain an expected return of 17%? (Enter as decimals. (e.g., 11% would be entered as 0.11.)) Weight A Stock B Weight B c) Calculate the Sharpe ratio of portfolio C. (Enter A, B, or C) d) Based on all the statistics you calculated so far, would you rather invest in portfolio C, or in the individual stocks A and B? Stock A has an expected return of 18% and a standard deviation of 38%. Stock B has an expected return of 14% and a standard deviation of 21%. The correlation coefficient between two stocks is negative 0.4. The risk-free rate is 8%. (Do not round intermediate calculations. Round your final answers to 2 decimal places. (e.g., 0.9635 would be entered as 0.96)) a) Calculate the Sharpe ratio for the two stocks. Stock A b) Assume that you can invest in both of these assets in portfolio C. How much should you invest in stock A and stock B to obtain an expected return of 17%? (Enter as decimals. (e.g., 11% would be entered as 0.11.)) Weight A Stock B Weight B c) Calculate the Sharpe ratio of portfolio C. (Enter A, B, or C) d) Based on all the statistics you calculated so far, would you rather invest in portfolio C, or in the individual stocks A and B?
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