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You are considering combining two risky portfolios, one made of stocks and another made up of cryptocurrencies. The following information is provided about the expected returns of each portfolio. State of economy Recession Boom Normal Stocks -10% 35% 28% Crypto 15% 30% 25% a) If you decided to invest 30% in the stock portfolio and 70% in the cryptocurrency portfolio, what is the return of the new portfolio? (5) b) If the standard deviation of the crypto portfolio is 24%, calculate the standard deviation of the new portfolio containing stocks and crypto. (3) c) If the correlation coefficient of the new portfolio is 0,33, comment on the overall risk of the portfolio. Do you think it is a good idea to combine these securities? (2) You are considering combining two risky portfolios, one made of stocks and another made up of cryptocurrencies. The following information is provided about the expected returns of each portfolio. State of economy Recession Boom Normal Stocks -10% 35% 28% Crypto 15% 30% 25% a) If you decided to invest 30% in the stock portfolio and 70% in the cryptocurrency portfolio, what is the return of the new portfolio? (5) b) If the standard deviation of the crypto portfolio is 24%, calculate the standard deviation of the new portfolio containing stocks and crypto. (3) c) If the correlation coefficient of the new portfolio is 0,33, comment on the overall risk of the portfolio. Do you think it is a good idea to combine these securities? (2)
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a The return for the new portfolio would be the sum of the returns on each of its parts 103528 73 Si... View the full answer
Related Book For
Principles of Accounting
ISBN: 9780077300456
1st edition
Authors: Robert Libby, Patricia Libby, Fred Phillips, Stacey Whitecotton
Posted Date:
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