Question: Portfolio Variance Outcomes Boom Normal Bust Probability(p) 0.2 0.5 0.3 rx 40% 26% -10% Wx= E(rp) = WE(r.) + W,E(r.) ry 50% 34% -20%

Portfolio Variance Outcomes Boom Normal Bust Probability(p) 0.2 0.5 0.3 rx 40% 26% -10% Wx= E(rp) = WE(r.) + W,E(r.) ry 50% 34% -20% E(r) = 18%, E(ry) = 21% Suppose the current market prices of stocks X and Y are $20 and $50, respectively. You plan to purchase 20,000 shares of X and 12,000 shares of Y. Corr(r,,ry) is estimated to be 20%. Wy=

Step by Step Solution

★★★★★

3.48 Rating (155 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

ANS WER W x 20 000 32 000 0 625 W y 12 000 32 000 0 375 E r p 0 625 18 0 375 21 19 125 EX PL AN ... 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!

Karen Johnson, CFO for Raucous Roasters (RR), a specialty coffee manufacturer, is rethinking her company's working capital policy in light of a recent scare she faced when RR's corporate banker,...

The required returns of Stocks X and Y are rX = 10% and rY = 12%. Which of the following statements is correct? a) If the market is in equilibrium, and if Stock Y has the lower expected dividend...

Suppose that X and Y are distributed bivariate normal with density given in Equation (17.38). a. Show that the density of Y given X = x can be written as where b. Use the result in part (a) to show...

You plan to purchase a $ 100,000 house using a 30-year mortgage obtained from your local credit union. The mortgage rate offered to you is 8.25 percent. You will make a down payment of 20 percent of...

Consider the following information on a portfolio of three stocks: a. If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio's expected return? The...

3 If Blades does not enter into the agreement with the US firm and continues to export to Thailand and import from Thailand and Japan, do you think the increased correlations between the Japanese yen...

Need help with the 70 multiple choice questions for final exam - if you can, please provide explanation for harder questions. A s ae o . s h r d n. . Surname: ______________________ Q1 Given names:...

Consider the following information about three stocks: a. If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolio expected return? The variance? The...

Jenco Incorporateds only product is a combination fertilizer-weed killer called Fertikil. Fertikil is sold nationwide through normal marketing channels to retail nurseries and garden stores. Taylor...

Consider the following information on a portfolio of three stocks; (a) If your portfolio is invested 40 percent each in A and B and 20 percent in C, what is the portfolios expected return? The...

Consider the following information on three stocks: a. If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? The variance? The standard...

In the frequency distribution in Example 9, 599.5 was chosen as the midpoint for the class of $500 or more. How does the sample mean and standard deviation change when the midpoint of this class is...

In April 2021, the Soccer world was thrown into turmoil as 12 of the biggest clubs in Europe came together to create the European Super League (ESL) in order to rival the UEFA Champions League (UCL)...

Use the product rule to find the derivative. f ( x ) = ( 4 x 3 9 ) ( 4 x 7 - 8 ) A . f ' ( x ) = 1 6 0 x 9 2 5 2 x 6 - 9 6 x B . f ' ( x ) = 1 6 0 x 9 2 5 2 x 6 - 9 6 x 2 C . f ' ( x ) = 1 6 x 9 2 5...

two cables are tied together at A and loaded at shows.draw the free body diagram of the setup shown, determine the tension in cable AC if 859 mm is a lenght and 181N , determine the tension in cable...

Carlson invented a new valve for natural gas pipelines, and sold his drawings to Pipeco, a manufacturer of such items. A dispute arose before production began, and both parties immediately agreed to...

Mary applied for a job at the Millstone Restaurant. She was told her uniform would be a white blouse and black skirt, with a hem an inch above the knee. She agreed, but when she started work, she...

A hollow steel tube with an inside diameter of 80 mm must carry an axial tensile load of 330 kN. Determine the smallest allowable outside diameter of the tube if the working stress is 110 MN/m^2.

On July 1, 2020, Cheyenne Co. pays $13,620 to Ayayai Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. Journalize the entry on July 1 and the adjusting...

In 2023, the average number of children born to the typical U.S. woman over her lifetime was about __________. Question 7 options: 2.7 1.8 0.7 3.1

Assignment 1 Instructions Assignment 1 should be submitted after you have completed Unit 2. This assignment is worth 15 percent of your final grade. Assignment 1 contains five problems. The maximum...

Hi, Can you take a look at the attached material and let me know if you can help me with it and show all your work. The question is in the JPG file and you will need the Excel workbook and Word doc...

please help me in 70 dollars to do this assignment iin APA style referencing Topic 1 & 2 Introduction to financial management and the Australian Taxation system Financial Markets 2 Learning...

Finance &Investments Analysis Homework help Attached files are the questions and files needed ECO366 Investments Analysis Problem Set 3 This problem set will require you to calculate and plot...

Algorithms in Artificial Intelligence (or, the old name: Introduction to Algorithmic Decision Making) Part 1 Based on slides by David Sarne and Lirong Xia Course Tentative Schedule Introduction...

1. A player throws a fair die and simultaneously flips a fair coin. If the coin lands heads, then she wins twice, and if tails, then one-half of the value that appears on the die. Determine her...