FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. (Single index model; portfolio; beta) Assume the single index model holds. You own 2,000 shares of each of the following two stocks: Stock Standard

image text in transcribed

2. (Single index model; portfolio; beta) Assume the single index model holds. You own 2,000 shares of each of the following two stocks: Stock Standard deviation Beta Price per share A 50% 1.6 $25 B 30% 0.8 $15 The standard deviation of return on the market portfolio is 25%. (a) What is the beta of your portfolio? (b) What is the residual variance of return on stock A? (c) What is the standard deviation of return on your portfolio? 2. (Single index model; portfolio; beta) Assume the single index model holds. You own 2,000 shares of each of the following two stocks: Stock Standard deviation Beta Price per share A 50% 1.6 $25 B 30% 0.8 $15 The standard deviation of return on the market portfolio is 25%. (a) What is the beta of your portfolio? (b) What is the residual variance of return on stock A? (c) What is the standard deviation of return on your portfolio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Finance

International Finance

Authors: Keith Pilbeam

2nd Edition

0333730976, 978-0333730973

More Books

Students also viewed these Finance questions

Question

★★★★★
Explain the close association between Maria's mental illnesses and her physical co morbidity. Describe how Maria would answer quantitative questions regarding four dimensions of health: life...

Answered: 1 week ago

Question

★★★★★
Let A1, A2,, An be completely independent events on a sample space with P(Ai) = pi, for i = 1, 2,, n. The probability that none of the events Ai occur is equal to - =1 - Pi).

Answered: 1 week ago

Question

★★★★★
The following financial data are for the dental practice of Dr. David Malone when he began operations in July. Determine the amounts that would appear in Dr. Malones balance sheet. 1. Owes $19,000 to...

Answered: 1 week ago

Question

★★★★★
The circuit should have four inputs: A, B, C, and D. The circuit should have two outputs: Wand X The output W should be a 1 if and only if there aren't two adjacent 1s in the inputs (i.e. A and B, B...

Answered: 1 week ago

Question

★★★★★
Colgate manufactures toothbrushes. The brushes are manufactured in 2 sequential processes: Molding and Assembly. The toothbrush handles are manufactured in Colgate brushes own facility in the Molding...

Answered: 1 week ago

Question

★★★★★
This is a circuit design i made in TinkerCAD. I am trying to use the green LED with variable brightness as a function of the Ultrasonic sensor reading. The three Red LEDs are a warning indicator if...

Answered: 1 week ago

Question

★★★★★
Question 3 (10 points) Listen What is corporate personhood, and how does it relate to corporate social responsibility? Relate this to our discussion on Exxon Mobile (the largest Oil and Gas...

Answered: 1 week ago

Question

★★★★★
Problem 4. PREVIEW ONLY -- ANSWERS NOT RECORDED (2 points) Assume you are to select digits from the set {2, 3, 4, 5, 6, 7, 9} to form a number between 20 and 900. 60 (1) HOW MANY such numbers can be...

Answered: 1 week ago

Question

★★★★★
Problem 1: Consider the following Matrix A: A = [222] a) Find the Eigenvalues of A. Show all your work by hand b) Find the Eigenvectors of A. Show all your work by hand c) Normalize the Eigenvectors....

Answered: 1 week ago

Question

★★★★★
(1) You need to move an object having mass of 23 kg. In one case, you are pulling at an angle of 30. In another case, you are pushing it at the same angle. Frictional coefficient = 0.50. (a) Compute...

Answered: 1 week ago

Question

★★★★★
1. Research indicates that employee misconduct tends to increase in companies where mergers, acquisitions, and restructurings are under way. Why do you think this happens?

Answered: 1 week ago

Question

★★★★★
3. Most employees do not disclose the fraud and corruption they observe in the workplace, and, therefore, criminal and immoral behaviors continue to flourish. Who or what can intercept this lack of...

Answered: 1 week ago

Question

★★★★★
2. Do you think it is realistic to attempt to encourage a lifetime of customer patronage in todays uncertain business climate? Elaborate on your response.

Answered: 1 week ago

Previous Question Next Question