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begin{tabular}{|l|c|} & Average annual rate of return (nominal) hline Treasury bills & 0.027 hline Government bonds & 0.039 hline Corporate bonds &
\begin{tabular}{|l|c|} & Average annual rate of return (nominal) \\ \hline Treasury bills & 0.027 \\ \hline Government bonds & 0.039 \\ \hline Corporate bonds & 0.057 \\ \hline Common stocks (Standard \& Poor 500 ) & 0.123 \\ \hline Small-firms & 0.158 \\ \hline \end{tabular} 7) Complete the foregoing table and calculate the risk of Ringbell Co. a. Variance =0.71% and standard deviation =8.43% b. Variance =0.85% and standard de deviation = 9.24% c. Variance =21.36% and standard de deviation = 46.22% d. Variance =25.63% and standard deviation = 50.63% 8) Calculate the risk (in terms of standard deviation) of a portfolio integrated by two stocks, McGraw and Hill, based on the following information: weight of McGraw =40 percent; standard deviation =27 percent; standard deviation of Hill 53 percent; correlation =()0.75. a. 0.061 b. 0.087 c. 0.295 d. 0.248 9) (Continuation) Assume that McGraw' s beta (to market) is 0.48 and Hill' s is 0.68. Determine the beta of the portfolio. a. 0.67 b. 0.53 c. 0.60 d. 0.87 10) We have set up a welldiversified portfolio with stocks which average beta is 1.5. Assuming that the market standard deviation is 0.25, determine the risk of the portfolio (in terms of standard deviation). a. 0.375 b. 1.368 c. 0.197 d. 0.272 \begin{tabular}{|l|c|} & Average annual rate of return (nominal) \\ \hline Treasury bills & 0.027 \\ \hline Government bonds & 0.039 \\ \hline Corporate bonds & 0.057 \\ \hline Common stocks (Standard \& Poor 500 ) & 0.123 \\ \hline Small-firms & 0.158 \\ \hline \end{tabular} 7) Complete the foregoing table and calculate the risk of Ringbell Co. a. Variance =0.71% and standard deviation =8.43% b. Variance =0.85% and standard de deviation = 9.24% c. Variance =21.36% and standard de deviation = 46.22% d. Variance =25.63% and standard deviation = 50.63% 8) Calculate the risk (in terms of standard deviation) of a portfolio integrated by two stocks, McGraw and Hill, based on the following information: weight of McGraw =40 percent; standard deviation =27 percent; standard deviation of Hill 53 percent; correlation =()0.75. a. 0.061 b. 0.087 c. 0.295 d. 0.248 9) (Continuation) Assume that McGraw' s beta (to market) is 0.48 and Hill' s is 0.68. Determine the beta of the portfolio. a. 0.67 b. 0.53 c. 0.60 d. 0.87 10) We have set up a welldiversified portfolio with stocks which average beta is 1.5. Assuming that the market standard deviation is 0.25, determine the risk of the portfolio (in terms of standard deviation). a. 0.375 b. 1.368 c. 0.197 d. 0.272
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