K Suppose Target's stock has an expected return of 15% and a volatility of 43%, Hershey's...
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K Suppose Target's stock has an expected return of 15% and a volatility of 43%, Hershey's stock has an expected return of 14% and a volatility of 26%, and these two stocks are uncorrelated. a. What is the expected return and volatility of an equally weighted portfolio of the two stocks? Consider a new stock with an expected return of 14.5% and a volatility of 26%. Suppose this new stock is uncorrelated with Target's and Hershey's stock. b. Is holding this stock alone attractive compared to holding the portfolio in (a)? c. Can you improve upon your portfolio in (a) by adding this new stock to your portfolio? Explain. a. What is the expected return and volatility of an equally weighted portfolio of the two stocks? The expected return is %. (Round to two decimal place.) The volatility is %. (Round to two decimal place.) Consider a new stock with an expected return of 14.5% and a volatility of 26%. Suppose this new stock is uncorrelated with Target's and Hershey's stock. b. Is holding this stock alone attractive compared to holding the portfolio in (a)? (Select the best choice below.) OA. No, Target dominates the new stock. OB. No, a combination of the Hershey and Target stocks has the same expected return but with a lower volatility. OC. Yes, the new stock dominates Target. OD. Yes, the new stock dominates Hershey, so you should hold this stock alone. c. Can you improve upon your portfolio in (a) by adding this new stock to your portfolio? Explain. (Select the best choice below.) K Suppose Target's stock has an expected return of 15% and a volatility of 43%, Hershey's stock has an expected return of 14% and a volatility of 26%, and these two stocks are uncorrelated. a. What is the expected return and volatility of an equally weighted portfolio of the two stocks? Consider a new stock with an expected return of 14.5% and a volatility of 26%. Suppose this new stock is uncorrelated with Target's and Hershey's stock. b. Is holding this stock alone attractive compared to holding the portfolio in (a)? c. Can you improve upon your portfolio in (a) by adding this new stock to your portfolio? Explain. a. What is the expected return and volatility of an equally weighted portfolio of the two stocks? The expected return is %. (Round to two decimal place.) The volatility is %. (Round to two decimal place.) Consider a new stock with an expected return of 14.5% and a volatility of 26%. Suppose this new stock is uncorrelated with Target's and Hershey's stock. b. Is holding this stock alone attractive compared to holding the portfolio in (a)? (Select the best choice below.) OA. No, Target dominates the new stock. OB. No, a combination of the Hershey and Target stocks has the same expected return but with a lower volatility. OC. Yes, the new stock dominates Target. OD. Yes, the new stock dominates Hershey, so you should hold this stock alone. c. Can you improve upon your portfolio in (a) by adding this new stock to your portfolio? Explain. (Select the best choice below.)
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