5. You wish to create a portfolio consisting of the stocks Coil Inc. and Amp Engines....
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5. You wish to create a portfolio consisting of the stocks Coil Inc. and Amp Engines. You observe the following information about past returns: Annual Returns 2018 2019 2020 Coil Amp 5.26% 4.84% 5.18% 16.49% 4.70% -4.45% Furthermore, your analysts have provided a preliminary report about the individual stock performance: Coil Amp E[r] 5.05% 5.63% Volatility (g) 0.30% 10.49% You consider investing 89% in stock A and 11% in stock B. a) Compute the covariance and correlation between both stocks! b) Compute the expected return of this portfolio! c) Compute the expected volatility of this portfolio! 5. You wish to create a portfolio consisting of the stocks Coil Inc. and Amp Engines. You observe the following information about past returns: Annual Returns 2018 2019 2020 Coil Amp 5.26% 4.84% 5.18% 16.49% 4.70% -4.45% Furthermore, your analysts have provided a preliminary report about the individual stock performance: Coil Amp E[r] 5.05% 5.63% Volatility (g) 0.30% 10.49% You consider investing 89% in stock A and 11% in stock B. a) Compute the covariance and correlation between both stocks! b) Compute the expected return of this portfolio! c) Compute the expected volatility of this portfolio!
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a Covariance and correlation can be calculated using below formula Annual Return Coil Amp 2018 526 ... View the full answer
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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