Question: Using the following correlation matrix, which two stocks would combine to make the lowest-risk portfolio? (Assume the stocks have equal risk and returns.) Stock

Using the following correlation matrix, which two stocks would combine to make the lowest-risk portfolio? (Assume the stocks have equal risk and returns.) Stock A B C A +1 -- B -0.2 +1 -- C +0.6 0.1 +1

Step by Step Solution

★★★★★

3.43 Rating (153 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To find the two stocks that would combine to make the lowestrisk portfolio we need to find the two s... 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 Finance Questions!

In this essay, define Horizontal Analysis and explain how it is conducted on income statements and balance sheets. Then discuss the Horizontal Analysis you completed on Netflix by emphasizing your...

13. What is a lower bound for the price of 3-month call option on a non- dividend-paying stock when the stock price is $50, the strike price is $45, and the 3-month risk-free interest rate is 8%?...

Northern Virginia Community College HOW MUCH FINANCIAL RISK SHOULD YOU TAKE? Mark D. D'Antonio Nova Southeastern University FORT LAUDERDALE, FLORIDA, U.S.A. Abstract A successful retirement...

The article Mutational Landscape Determines Sensitivity to PD-1 Blockade in Non-Small Cell Lung Cancer (Science, 3 April 2015) described a study of 16 cancer patients taking the drug Keytruda. For...

What is the difference between bilateral clearing and multilateral clearing?

If Hillside wanted to put more emphasis on order-getting to promote growth, what ideas do you have for how to do it?

Describe how mixed methods analysis and interpretation issues are addressed.

Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing...

Tempo Company's fixed budget (based on sales of 12,000 units) for the first quarter reveals the following Fixed Budget Sales (12,000 units $215 per unit) $2,580,000 Cost of goods sold Direct...

At Peterson State High School, exam results in both Economics and Legal Studies are known to be normally distributed. The mean Economics exam result is 73 marks and the standard deviation is 8 marks....

Crowe Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. ( Click the icon to view the accounts receivable information. ) Based on these facts,...

Question 18 1 pts For the gear trains sketched in the given figures, compute the output speed of the output shaft if the input shaft rotates at 1750 rpm (Accuracy .X RPM, don't include +'s or -'s...

Explain what cloud service the New York Times successfully utilized and the benefit this solution provided.

The projectile of the .22LR cartridge fits a barrel with a nominal _________________-inch diameter bore, while the .223/5.56 is designed for a bore with the nominal diameter of .224

Greenfield Valley is a fertile agricultural region known for its high-quality crop production. However, the area has been facing significant soil erosion issues due to a combination of factors,...

Even though your authority is limited and there is little you can do right now to alter the physical environment, what can you do to improve safety?

Question Content Area The following data are given for Zoyza Company: Budgeted production (at 100% of normal capacity) 26,000 units Actual production 27,500 units Materials: Standard price per ounce...

Write out the formula for the total costs of carrying and ordering inventory, and then use the formula to derive the EOQ model. Andria Mullins, financial manager of Webster Electronics, has been...

How are qualified dividends taxed in 2012? Please give the two rates of tax which apply to qualified dividends, and specify when each of these rates applies._________________________...

Jim (age 50) and Martha (age 49) are married with three dependent children. They file a joint return for 2012. Their income from salaries totals $50,000, and they received $10,000 in taxable...

During 2012, Tom sold Sears stock for $10,000. The stock was purchased 4 years ago for $13,000. Tom also sold Ford Motor Company bonds for $35,000. The bonds were purchased 2 months ago for $30,000....

1. What are some life values that are important to you (e.g., treat others with respect, work hard to succeed in life)? How did you come to hold those values? Who did you learn them from?

1. Easy temperament is defined by a very regular, adaptable, mildly intense style of behavior that is positive and responsive.

4.1 Contrast development with change.