7. You have the following information about two stocks: . Expected return Standard deviation Jon, Inc....
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7. You have the following information about two stocks: . Expected return Standard deviation Jon, Inc. 12.7% Daenerys, Ltd. 17.4% 9% 12% Beta 1.2 1.9 Assume you invest 40% of your funds in Jon and 60% in Daenerys, and the correlation of returns between the two is 0.3. Calculate the expected return, standard deviation, and beta of this portfolio. Calculate what happens to the expected return, standard deviation, and beta of the portfolio if the correlation of returns between the stocks is a) 1.0, b) 0.0, and c) -1.0. 7. You have the following information about two stocks: . Expected return Standard deviation Jon, Inc. 12.7% Daenerys, Ltd. 17.4% 9% 12% Beta 1.2 1.9 Assume you invest 40% of your funds in Jon and 60% in Daenerys, and the correlation of returns between the two is 0.3. Calculate the expected return, standard deviation, and beta of this portfolio. Calculate what happens to the expected return, standard deviation, and beta of the portfolio if the correlation of returns between the stocks is a) 1.0, b) 0.0, and c) -1.0.
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Related Book For
Financial management theory and practice
ISBN: 978-1439078099
13th edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
Posted Date:
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