Question: With below information justify below statement for a portfolio with two stock A and B where $10000 Invested in A and $5000 short on B

With below information justify below statement for a portfolio with two stock A and B where $10000

Invested in A and $5000 short on B

Statement: If stocks are positively correlated in portfolio then taking opposite position in the two assets has the effect of offsetting the fluctuation.

Stock Mean STD

A 12% 24%

B 15% 30%

Correlation coefficient = 0.33

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 Mathematics Questions!

With below information justify below statement for a portfolio with two stock A and B: Statement: Portfolio diversification reduce risk even if stocks are positively correlated in portfolio and...

Only answer question #9-11 please II. Mean-variance portfolio analysis Stocks A has an expected daily return of 0.25% and B has an expected daily return of 0.30%, and they have following...

1 - Jessie bought 5 0 0 shares of Ford on january 1 st and enrolled in the DRIP program. Ford paid a dividend of $ 1 . 0 0 per share at the end of that year. Assuming Jessie holds the stock for two...

Below are finance questions Jessie bought 5 0 0 shares of Ford on january 1 st and enrolled in the DRIP program. Ford paid a dividend of $ 1 . 0 0 per share at the end of that year. Assuming Jessie...

*********PLEASE ANSWER THIS QUESTION THOROUGHLY AND BRIEFLY********* Question 1 [9 points] True or false? If it is true, please justify why it is a true statement. If it is false, please explain...

Question 1 [9 points] True or false? If it is true, please justify why it is a true statement. If it is false, please explain exactly why it is false. [3 pts each; 1 pt for true/false answer, 2 pts...

True or false? If it is true, please justify why it is a true statement. If it is false, please explain exactly why it is false. [3 pts each; 1 pt for true/false answer, 2 pts for explanation] a. A...

True or false? If it is true, please justify why it is a true statement. If it is false, please explain exactly why it is false. (with explanation) A portfolio comprises two stocks, A and B, with...

Discuss with relevant examples the social factors that account for different mortality rates in a population

Using the data in Appendix D, compute the regression equation for predicting GPA from ADDSC.

The article titled Understanding Jingles and Needledrop: A Rhetorical Approach to Music in Advertising (see endnote 79) suggests that music in commercials communicates specific meanings to listeners...

The three-station work cell at Pullman Mfg., Inc. is illustrated in the figure below. It has two machines at station 1 in parallel (i.e., the product needs to go through only one of the two machines...

9. Imagine giving a talk to an assembly that is critical of you. Imagine a large aggressive dog that is your friend and facing the assembly. Imagine further that you are on a mountain top and the...

8. Now spend two to three hours walking around listening to what people are saying. Place yourself in a place where you can hear what people are saying clearly and distinctly, for example in a cafe,...

5. Think through your own way of representing the world. What is your main pattern: Visually, verbally, emotions, smells, tastes?