Question
1. Katherine Wilson is wondering how much she must undertake to generate an acceptable return on her portfolio. The risk-free return currently is 6%. The
1.Katherine Wilson is wondering how much she must undertake to generate an acceptable return on her portfolio. The risk-free return currently is 6%. The return on average stock (market return) is 14%. Use the CAMP to calculate the beta coefficient associated with a portfolio return of 20%
how can you calculate this using excel? Solve using excel
2. Jamie Wong is considering building an investment portfolio containing two stocks, L and M. Stock L will represent 65% of dollar value of the portfolio, and stock M will account for the other 35%. The expected returns over the next 6 years, 2015-2020, for each of the stocks are shown in the following table. Solve using excel formulas
year | Expected return | Expected return |
Year | Stock L | Stock M |
2015 | 15% | 23% |
2016 | 15% | 23% |
5017 | 17% | 23% |
2018 | 17% | 23% |
2019 | 17% | 23% |
2020 | 17% | 23% |
a. Calculate the expected portfolio return, for each of the 6 years. |
b. Calculate the expected value of portfolio returns, over the 6-years period. |
c. Calculate the standard deviation of expected portfolio returns, over the 6-year period. |
d. How would you characterize the correlation of returns of the two stocks L and M? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started