Question: Let the risk returns values are: Stock fund = 10% Bond fund = 5% Standard deviation Stock fund = 15% Bond fund =9% Coefficient

Let the risk returns values are: Stock fund = 10% Bond fund

= 5% Standard deviation Stock fund = 15% Bond fund =9% Coefficient

of correlation r = -0.20 Values calculated by Zenith wealth are: Two

Let the risk returns values are: Stock fund = 10% Bond fund = 5% Standard deviation Stock fund = 15% Bond fund =9% Coefficient of correlation r = -0.20 Values calculated by Zenith wealth are: Two Asset Portfolio Calculator Stock 1 Expected Return: 10 Standard Deviation: 15 Correlation Coefficient: Calculate Weight 1 Return 100 % 10 % 9.5 % 9 % 8.5 % 8 % 7.5 % 7 % 6.5 % 6 %% 5.5 % 5 90 80 Expected 70 60 50 40 30 20 10 0 % 5 % 9 Clear Stock 2 Variance -0.20 Standard Deviation % 0.0225 % 0.01782 % 0.01386 % 0.01062 % 0.0081 % 0.0063 % 0.00522 % 0.00486 % 0.00522 % 0.0063 % 0.0081 9 15 13.35 11.77 10.31 9 7.94 7.22 6.97 7.22 7.94 % %% % Portfolio SD is equal to standard deviation of bond fund at stock fund weight 60% and debt fund weight 1-0.60=40%. The questions on the above scenario are? 4. The results show that a portfolio of both funds will have a standard deviation (?) equal to that of the bond fund alone but a higher return. What are the portfolio weights and expected return of this portfolio?

Step by Step Solution

★★★★★

3.37 Rating (150 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The detailed ... View full answer

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 Accounting Questions!

Calculate the return and standard deviation of a portfolio that holds these two stocks in the following weights 0100 1090 2080 3070 4060 5050 6040 7030 8020 9010, 1000 Plot these portfolio return...

The expected return and standard deviation of returns of General Mills common stock over the next year are estimated to be 20 percent and 12 percent, respectively. Assume that the returns are...

The correlation coefficient between the returns on a broad index of U.S. stocks and the returns on indexes of the stocks of other industrialized countries is mostly _______, and the correlation...

Let the risk returns values are: Stock fund = 10% Bond fund =5% Standard deviation Stock fund = 15% Bond fund =9% Coefficient of correlation r = -0.20 Values calculated by Zenith wealth are:...

1. Create a new class named Scene. 2. Add a main method to the Scene class that simply creates a new Scene object like this: Scene scene = new Scene(); This should be all that is in main at this...

ONLY NEED ANSWER TO #6 & #7 Stock fund (S) Bond fund (B) Expected Return Standard Deviation 20% 12 30% 15 The correlation between the fund returns is .10. 6. Draw a tangent from the risk-free rate to...

Consider the hospital that wishes to invest in the STP and the LTP such that the total expected return on the portfolio is 6%. How does the introduction of real assets alter the risk and composition...

Week 11: Discussion Board 3 This Discussion Board builds on applying two key concepts of diversification: correlation of asset returns and risk reduction. In Chapter 11 last week we developed the...

Part TWO Portfolio Theory distributions of the The following data apply to Problems 8-12 pension fund manager is considering three mutual funds. The first is a stock te bond fund, and the third is at...

spreadsheet contains monthly returns to a stock fund and a bond fund as well as the risk-free return from January 2000 to September 2019. A. [2 points] Compute the arithmetic average monthly returns...

What are some of the distinguishing properties of a normal distribution? Discuss in detail.

Let ( = {-2, - 1, 3, 7}, and let measure be defined by: ({-2}) = 2, ({- 1}) = 1, ({3}) = 3, ({7}) = 7. Let X be a r.v. defined by: X(- 2) = X(- 1) = - 1, and X(3) = X(7) = 1. Then, for a = {-2, 3,...

15. Sustainable Growth (LO5) Assuming the following ratios are constant, what is the sustainable growth rate? Total asset turnover = 2.50 Profit margin = 7.8% Equity multiplier = 1.80 Payout ratio 60%

Find the least number which must be divided make each a perfect square number 2361 using prime factorization method

The percent frequency distributions of job satisfaction scores for a sample of information systems (IS) senior executives and middle managers are as follows. The scores range from a low of 1 (very...

Garlington Technologies Inc.'s 2016 financial statements are shown below: Balance Sheet as of December 31, 2016 Income Statement for December 31, 2016...

Joshua & White (J&W) Technology's financial statements are also shown here. Answer the following questions. a. Has J&W's liquidity position improved or worsened? Explain. b. Has J&W's ability to...

Williams & Sons last year reported sales of $12 million, cost of goods sold (COGS) of $10 million, and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new...

In performing research for an ecology class, students at a college in upstate New York collect data on streams each year. They record a number of biological, chemical, and physical variables,...

The table below shows the prices in Canada of cotton towels produced in the United States, Canada, and Malaysia. Assume that all cotton towels are identical. a. Suppose Canada imposes a 20 percent...

The Environmental Protection Agency (EPA) tracks fuel economy of automobiles based on information from the manufacturers (Ford, Toyota, etc.). Among the data the agency collects are the manufacturer,...