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Based on the following information determine the covariance
Based on the following information determine the covariance and correlation between the returns of the two stocks.
| State of Economy |
Probability of State of Economy |
Return of X |
Return of Y |
| Bear |
0.35 |
-0.02 |
0.034 |
| Normal |
0.60 |
0.138 |
0.062 |
| Bull |
0.05 |
0.218 |
0.092 |
| Cov = 0.001243,Corr=0.9794 |
| Cov = 0.001243,Corr=0.00025 |
| Cov= 0.001469,Corr=0.9610 |
Your stock portfolio contains 4 stocks with the following betas and weight as a percentage of your portfolio. What is the portfolio beta?
|
Weight |
Beta |
| Stock A |
10 pct. |
0.75 |
| Stock B |
35 pct. |
1.90 |
| Stock C |
20 pct. |
1.38 |
| Stock D |
35 pct. |
1.16 |
You are constructing a two stock portfolio based on the information provided below. What dollar amount will you invest in each stock to achieve the desired return goal?
|
Stock X |
Stock Y |
| Expected Return |
14.0% |
9.0% |
Goal Return of Portfolio: 10.00%
Dollar Amount to Invest: $20,000
A firm you are analyzing has had the following returns the past 5 years: 27.0%, 33.0%, -40.0%, -14.0% and 22.0 %. What are the standard deviation and variance of the past five year returns?
A stock has had returns of 16.12%, 12.11%, 5.83%, 26.14%, and -13.19% over the past five years. What was the holding period return for the stock?
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