Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 29, 2024

An investor has $2,000 invested in stock A and $5,000 in stock B. The daily volatilities of A and B are 1.5% and 1% respectively

An investor has $2,000 invested in stock A and $5,000 in stock B. The daily volatilities of A and B are 1.5% and 1% respectively and the coefficient of correlation is 0.8. Using the 10 day 95% VaR, what are the benefits of diversification?

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

Recommended Textbook for

Principles Of Project Finance

Authors: E. R. Yescombe

2nd Edition

0123910587, 9780123910585

More Books

Students also viewed these Finance questions

Question

★★★★★

For the system shown in Figure, I1 = I2, cT1 = cT2, cT1/I1 = 0.1 rad-1.s-1, and kT/11 = 1 s-2. Obtain the transfer function Æ1(s)/((s) and its Bode plots. Identify the resonant frequencies and...

Answered: 1 week ago

Question

★★★★★

Exercises in Compound Interest Study Appendix 9. Then answer the following questions: 1. It is your sixtieth birthday. You plan to work 5 more years before retiring. Then you want to spend $20,000...

Answered: 1 week ago

Question

★★★★★

Was a multiple-baseline design used, in that the treatment was applied to several behaviors, people, and settings? How diverse was the population to which the treatments were applied? Could the...

Answered: 1 week ago

Question

★★★★★

Stave Company invests $10,000,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates...

Answered: 1 week ago

Question

★★★★★

On December 31, 2011, Echo, Inc., issued $750,000 of 11%, 10-year bonds for $705,000, yielding an effective interest rate of 12%. Semiannual interest is payable on June 30 and December 31 each year....

Answered: 1 week ago

Question

★★★★★

A stock does not currently pay dividends. The first dividend of $2.7 will be paid in year 4. The second dividend of $5.7 will be paid in year 7. According to your analysis, you think you should be...

Answered: 1 week ago

Question

★★★★★

The need for ongoing change within the US healthcare system is warranted. However, before implementing change, advanced notice is given and explicit instructions on how the change will happen should...

Answered: 1 week ago

Question

★★★★★

People who want to raise kids should have to get a parenting license first. Parenting is a lot like piloting an airplane. In both cases, people's lives are in your hands: you could seriously injure...

Answered: 1 week ago

Question

★★★★★

From a collection of 7 different numbers and 8 different letters, 7- place license plates can be designed in such a way that the first 4 places are numbers and the next 3 places are letters....

Answered: 1 week ago

Question

★★★★★

Answer these questions about IP address space: (a) What is the theoretical maximum address space for a 32-bit address, such as that used by IPv4? (Ignore the fact that some addresses aren't usable or...

Answered: 1 week ago

Question

★★★★★

1. Jeff makes a contract with Acme Farms to buy 1000 apples for $200, which is the average price for apples at that time. The contract specifies that Jeff must have the apples by April 2 so that he...

Answered: 1 week ago

Question

★★★★★

2. Pinker, S. (1994). The language instinct: How mind creates language. New York: HarperPerennial; Pinker, S. (2008). The stuff of thought: Language as a window to human nature. New York: Penguin....

Answered: 1 week ago

Question

★★★★★

4. The national Student Voices Project was created in 2000 by the Annenberg Public Policy Center. Over the years, it has been launched in multiple cities. Learn more about this project by going to...

Answered: 1 week ago

Question

★★★★★

1. Visit the Institute of General Semantics website by going to the books online resources for this chapter and clicking on WebLink 4.4.

Answered: 1 week ago

Previous Question Next Question