Question: Imagin two assets with the following yearly returns Using excel, calculate the average yearly return (use geometric average) for each asset and for the combined

Imagin two assets with the following yearly returns

Using excel, calculate the average yearly return (use geometric average) for each asset and for the combined 50/50 portfolio. In this example, 50/50 portfolio means that each asset has a 50% share in the total portfolio and that the portfolio is rebalanced each year. Use excel formula STDEV.S() to calculate the standard deviation of returns.

Finally, imagine that you invested 10 000 EUR and equally divided your portfolio between assets A and B. However, you did not make any adjustments to the portfolio. Calculate the average yearly return (use geometric average) for such portfolio as well as the standard deviation of returns of this portfolio.

Select everything that is correct.

50/50 portfolio has a greater expected return than the portfolio that was never rebalanced

50/50 portfolio has a lower risk than the portfolio that was never rebalanced

portfolio that was never rebalanced has an expected return of 3.3%

portfolio that was never rebalanced has an expected return of 3.21%

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!

In this exercise, you modify the Password application from this chapters Apply lesson. Use Windows to make a copy of the Password Solution folder. Rename the copy Modified Password Solution. Open the...

Imagin two assets with the following yearly returns Using excel, calculate the average yearly return (use geometric average) for each asset and for the combined 50/50 portfolio. In this example,...

Imagin two assets with the following yearly returns yearly returns Asset A Asset B 50/50 portfolio year 1 year 2 year 3 year 4 -6.0% 10.0% -6.0% 10.0% 18.0% -9.0% 18.0% -9.0% 6.0% 0.5% 6.0% 0.5%...

YYES WE CAN USE EXCEL You have been given the following return data, E, on three assetsA, B, and C-over the period 2021-2024. Using these assets, you have isolated three investment alternatives: ::...

1. You are analyzing Microsoft to find an intrinsic value for Microsoft (MSFT) using the both the Constant Growth Dividend Discount Model (DDM) and the Non-Constant Growth DDM. An Excel spreadsheet...

Case Questions: Recall from class that components (in the WACC formula) are based on the (long-term) target debt-equity ratio. Assumptions: The beta of debt (for both Midland and its divisions) is...

Please help me answer question 4, 5 & 6. Background Information This assessment task requires your team to develop a written presentation based on information that your lecturer has collected for...

In Parts 1 through 3 you will use data on the stock returns of 8 stocks to examine the Expected Returns and Variances of individual stocks, how correlated their returns are, and how you might combine...

Solve all with excel formular format: 1 . You are managing a portfolio consisting of two stocks: Stock A and Stock B . Stock A has an average yearly return of 1 5 % with a standard deviation of 1 0 %...

a) The driver of a vehicle travelling near the design speed is expected to see a minimum length of 160m of a 2-lane paved highway ahead as per the requirements of the Ghana Highway Authority Road...

Tim Cook is required by his employer to use his own vehicle for his work. To compensate him, he is paid an annual allowance of $5,200. During the year, he drove the vehicle a total of 55,000km, of...

2. State true or false: Hydropower is a method of non-sustainable energy production. TRUE FALSE

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.): Stated Rate...