Question
3) Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .081, E(RB) = .141, A = .351, and B
| 3) Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .081, E(RB) = .141, A = .351, and B = .611. |
| a-1. | Calculate the expected return of a portfolio that is composed of 26 percent Stock A and 74 percent Stock B when the correlation between the returns on A and B is .41. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| a-2. | Calculate the standard deviation of a portfolio that is composed of 26 percent Stock A and 74 percent Stock B when the correlation between the returns on A and B is .41. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b. | Calculate the standard deviation of a portfolio with the same portfolio weights as in part (a) when the correlation coefficient between the returns on Stocks A and B is .41. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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Corporate Finance With Connect Access Card
Authors: Stephen Ross ,Randolph Westerfield ,Jeffrey Jaffe
10th Edition
1259672484, 978-1259672484
