An investment portfolio in Finland specializes in pulp and paper stocks and includes two of them. One
Question:
An investment portfolio in Finland specializes in pulp and paper stocks and includes two of them. One is Valmet (mean 0.1; standard deviation .025), and it accounts for 40% of the portfolio shares. The other Finnish pulp and paper manufacturer present in the portfolio is Stora Enso (mean 0.22; standard deviation 0.3), a higher-risk, higher-return investment.
a. What is the expected value and the standard deviation of the portfolio if the coefficient of correlation of the two stocks is 0.7?
b. What will they be if the correlation is 0.4 instead?
Step by Step Answer:
Statistics For Business And Economics
ISBN: 9781292315034
9th Global Edition
Authors: Paul Newbold, William Carlson, Betty Thorne
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
Students also viewed these Statistics questions
-
Stora Enso is a Finnish integrated global paper producer. Its sales have varied significantly over the past four years. The Group had, in 2011, some 30,000 employees in more than 35 countries...
-
The complete financial statements of Stora Enso Oyj for the companys year ended December 31, 2009, are available at the companys website (www.storaenso.com). Refer to Stora Ensos financial statements...
-
The complete financial statements of Stora Enso Oyj for the company's year ended December 31, 2011, are available at the company's website (www.storaenso.com). Refer to Stora Enso's financial...
-
Over the last few years, we have started to see some retailers open earlier and earlier on Thanksgiving Day. Others have taken a different approach and decide to remain closed. Is it a good strategy...
-
What criticisms can be made concerning the optimizing approach to decision making?
-
RMIT University architecture student Sybilla Sarin, 27, came from Jordan on a Student (Temporary) Class TU Subclass 500 visa. Sybilla, a shy girl who spoke English as her second language, was shy to...
-
Which of the following is not appropriate for the accountant's report on the results of applying agreed-upon procedures to prospective financial statements? a. State the accountant's opinion on the...
-
Material cost variances, use of variances for performance evaluation Katharine Stanley is the owner of Better Bikes, a company that produces high quality cross-country bicycles. Better Bikes...
-
Marlow Company uses a perpetual inventory system. During the year, it entered into the following purchases and sales transactions. Date Activities Jan. 1 Beginning inventory Feb. 10 Purchase Mar. 13...
-
Which method of determining product costs, job-order costing or process costing, would be more appropriate in each of the following situations? a. An Elmers glue factory. b. A textbook publisher such...
-
Suppose you have a traditional die with 6 faces numbered from 1 to 6. a. What is the population distribution of numbers on the die? b. Determine the sampling distribution of the sample mean of the...
-
PowerChina, a Chinese construction company, is building a large, new retail center at the Chengdu Industrial Development Zone, Sichuan. Yao Minhao, one of the project managers, requests that a pile...
-
Refer to the bond details in Problem 10-4B. Ripkin Company issues 9%, five-year bonds dated January 1, 2016, with a $320,000 par value. The bonds pay interest on June 30 and December 31 and are...
-
Light electric transport such as electric bicycles (EB) are expected to be common means of short distance transportation in urban area. As the engineer of an EB firms you are tasked to come up with a...
-
The following T-accounts provide selected data about Blossom's financial results for the year. Sadly, several key components went missing after a thief broke into the Blossom accounting office: Beg....
-
Indigo Corporation was starting a new style of jacket and was monitoring the costs of its first production run of these items during the month. The costs and transactions associated with this jacket...
-
The 2020 comparative balance sheet and income statement of Perfect Supply Corp. follows: (Click the icon to view the comparative balance sheet.) (Click the icon to view the income statement.) Perfect...
-
Create a ipynb file called PandasA4credit.ipynb and complete the following. For this assignment load but DO NOT INSTALL NumPy and Pandas: run the following at the top of your script and then complete...
-
Define the following terms as they are used in kinetic methods of analysis. (a) Order of a reaction (b) Enzyme (c) Michaelis constant (d) Integral method
-
The overall reaction and equilibrium constant value for a hydrogenoxygen fuel cell at 298 K is 2H 2 (g) + O 2 (g) 2H 2 O(l) K = 1.28 10 83 a. Calculate E cell and G 8 at 298 K for the fuel cell...
-
Given the estimated linear model y` = 10 + 5x1 + 4x2 + 2x3 a. Compute yn when x1 = 20, x2 = 11, and x3 = 10. b. Compute yn when x1 = 15, x2 = 14, and x3 = 20. c. Compute yn when x1 = 35, x2 = 19, and...
-
The following model was fitted to a sample of 30 families in order to explain household milk consumption: y = 0 + 1x1 + 2x2 + where y = milk consumption, in quarts per week x1 = weekly income, in...
-
The following model was fitted to a sample of 25 students using data obtained at the end of their freshman year in college. The aim was to explain students weight gains: y = 0 + 1x1 + 2x2 + 3x3 + ...
-
On March 1, 2017 Green Company purchased a new piece of equipment for 210,000 cash. On March 1 Green recorded the equipment purchase with a Debit to the Equipment account and a Credit to the Cash...
-
The price per share of your all-equity firm is $40, and there are 2M shares outstanding. Suppose that your firm issues $30M worth of debt. The debt has a face value of $30M, a coupon rate of 5...
-
Provide a detailed explanation explaining the importance of organizational politics in the workplace. I am providing two references that you can use in your response. Please provide the pros and cons...
Study smarter with the SolutionInn App