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, Calculate the correlation between yearly returns of assets A and B using the excel formula CORREL ().

Select everything that is correct.

asset B has a higher annual average return but a lower standard deviation of returns

50/50 portfolio has the highest annual average return

assets A and B are perfectly negatively correlated (correlation coefficient equals -1)

50/50 portfolio has a 0.4 percentage points lower annual average return than asset B, but almost 5 times lower risk

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 Responsible Party Model of Government (RPMG) was discussed in lecture and the text. Which of the following is a behavior consistent with this model? Question 27 options: a) When a Republican...

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...

1. Considering the world economic outlook for the coming year and estimates of sales and earning for the pharmaceutical industry, you expect the rate of return for Lauren Labs common stock to range...

Peosta Company identifies the following items for possible inclusion in the taking of a physical inventory. Indicate whether each item should be included or excluded from the inventory taking. (a)...

Several developments have combined to undermine the class action: (a) Congress passed a law, the Class Action Fairness Act, that pushed most class actions from state to federal court, (b) the Supreme...

? * * Which of the following formulas is INCORRECT? A . earnings growth rate = retention rate return on new investment B . Div ? t = E P S t Dividend Payout Rate C . P N = ( r E - g ) Div ? N 1 D . r...

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...