Question
Assume that you have opportunity to invest 15,000 in one of the following common stock. Year Stock (A) Stock (B) 2019 10% 8% 2018 13%
Assume that you have opportunity to invest 15,000 in one of the following common stock.
| Year | Stock (A) | Stock (B) |
| 2019 | 10% | 8% |
| 2018 | 13% | 12% |
| 2017 | 17% | 16% |
| 2016 | 20% | 20% |
Then you plan to invest in both stocks (A and B) as a portfolio investment and the weight of investment will be as follow:
| Stock | A | B |
| Weight | 60% | 40% |
| Correlation | 1 | |
Required: a. Calculate the expected return for both stock b. Calculate the expected risk based on standard deviation for both stock c. Calculate the expected risk based on coefficient variation (CV) d. Interpret which stock that you would like to invest based on risk and return concept e. Calculate the expected return of portfolio f. Calculate the expected risk of portfolio based on standard deviation
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
7th Edition
1439080526, 9781439080528
