Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Correlation Matrix Google Microsoft Apple Market Portfolio Securities Expected Return E(R;) 19.2% 21.9% 12.0% Standard Deviation oi 36% 35% 25% 1.0 0.7 1.0 Google Microsoft

image text in transcribed

Correlation Matrix Google Microsoft Apple Market Portfolio Securities Expected Return E(R;) 19.2% 21.9% 12.0% Standard Deviation oi 36% 35% 25% 1.0 0.7 1.0 Google Microsoft Apple Market Portfolio 0.6 0.5 1.0 0.5 0.6 0.4 12.0% 10% 1.0 The risk-free interest rate is 3%. (a) Given the correlation matrix, what is the covariance between Google and the Market? (b) Given the correlation matrix, what is the beta of Microsoft?Show that Microsoft is priced according to the CAPM. (c) What is the expected return and volatility of a portfolio that consists of a long position of $10,000 in Microsoft and a short position of $2,000 in Apple

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Financial Freedom

Authors: Timothy Turner

1st Edition

1801573573, 978-1801573573

More Books

Students also viewed these Finance questions