Question
Consider the following expected annual returns and standard deviations: Stock Expected Return Standard Deviation Boeing 5.5% 12.9% Nordstrom 7.2% 14.5% What would be the one-year
Consider the following expected annual returns and standard deviations:
Stock | Expected Return | Standard Deviation |
Boeing | 5.5% | 12.9% |
Nordstrom | 7.2% | 14.5% |
What would be the one-year expected return and standard deviation of a portfolio that consists of 1,000 shares of Boeing and 5,000 shares of Nordstrom stocks?
Boeing trades at $221.24 a share and Nordstrom trades at $31.47 a share as of today. Suppose the correlation coefficient between the annual stock returns of the two companies is 0.
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A. Expected return: 4.61%; Standard deviation: 11.05%
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B. Expected return: 5.13%; Standard deviation: 22.7%
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C. Expected return: 6.21%; Standard deviation: 9.65%
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D. Expected return: 6.92%; Standard deviation: 12.27%
E. Expected return: 6.35%; Standard deviation: 13.70%
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