Question: Security X has expected return of 8% and standard deviation of 15%. Security Y has expected return of 13% and standard deviation of 20%. The

Security X has expected return of 8% and standard deviation of 15%. Security Y has expected return of 13% and standard deviation of 20%. The two securities have a correlation coefficient of -1.0 (perfectly negatively correlated). The risk-free portfolio that can be formed with the two securities will earn a rate of return of ______.

Select one:

a.10.14%

b.12.28%

c.10.50%

d.12.05%

e.None of the options are correct

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 Cyclon project team has started gathering the information necessary to develop a project network-predecessor activities and activity time in days. The results of their meeting are found in the...

1) Security X has expected return of 12% and standard deviation of 20%. Security Y has expected return of 15% and standard deviation of 27%. If the two securities have a correlation coefficient of...

Question 9 1 pts Security X has expected return of 12% and standard deviation of 18%. Security Y has expected return of 15% and standard deviation of 26%. If the two securities have a correlation...

Show all work 2" (20 points) Security X has expected return of 10% and standard deviation of 30%. Security Y has expected return of 20% and standard deviation of 40%. The two securities have return...

20. You purchased 100 shares of MMM common stock on margin at $80 per share. Assume the initial margin is 45% and the maintenance margin is 30%. Below what stock price level would you get a margin...

The correlation coefficient is 0.7 Security X has expected return of 12% and standard deviation of 20%. Security Y has expected return of 15% and standard deviation of 27%. The two securities have a...

Security X has expected return of 12% and standard deviation of 18%. Security Y has expected return of 15% and standard deviation of 26%. If the two securities have a correlation coefficient of 0.47,...

1. Other things equal, diversification is most effective when (Single Choice) securities' returns are uncorrelated. securities' returns are positively correlated securities' returns are high...

Security X has expected return of 13% and standard deviation of 18%. Security Y has expected return of 17% and standard deviation of 23%. If a portfolio of these securities with 40% invested in...

Security X has expected return of 14% and standard deviation of 22%. Security Y has expected return of 16% and standard deviation of 28%. The two securities have a correlation coefficient of -1. You...

An electron has a charge of -1.6 x 10 -19 C. How many electrons would be needed to produce a net charge of -4.8 x 10 -6 C?

The balance sheet of Natathon International is as follows: Although the balance sheet appears reasonably healthy, Natathon is on the verge of ceasing operations. Appraisers have estimated that, while...

Shell company can be found through Examination of parental trust accounts A lifestyle / spending habits audit Examination of ownership All of the above

Question 1 (1 point) A business has performed a service but has not yet received payment from the customer. What is the correct journal entry? No entry is required. debits Accounts Receivable and...