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Incorrect Question 3 0/7 pts Consider the following expected returns, volatilities, and correlations: Stock Duke Energy Microsoft Wal-Mart Expected Return 14% 49 23% Standard Correlation
Incorrect Question 3 0/7 pts Consider the following expected returns, volatilities, and correlations: Stock Duke Energy Microsoft Wal-Mart Expected Return 14% 49 23% Standard Correlation with Correlation with Correlation with Deviation Duke Energy Microsoft Wal-Mart 6% 1.0 - 1.0 00 24% -1.0 1.0 0. 14% 0.0 0.7 1.0 The expected return of a portfolio that consists of a long position of $10,000 invested in Microsoft and a short position of $5,000 in Duke Energy is closest to: 749 102% 24.679 34% Incorrect Question 4 0/7 pts Consider the following expected returns, volatilities, and correlations: Expected Return Stock Duke Energy Microsoft Wal-Mart Standard Correlation with Correlation with Correlation with Deviation Duke Energy Microsoft Wal-Mart 69 1.0 -1.0 0.0 249 -1.0 1.0 0.7 149 0.0 0.7 1.0 4% 239 The volatility of a portfolio (standard deviation) that is equally invested in Microsoft and Wal-Mart is closest to: 16.60% 3.11% 17.62% 2.76% Incorrect Question 5 0/7 pts You are considering investing in a portfolio with exactly two stocks Tesla and Microsoft. Suppose Tesla's stock has a beta of 1.96, whereas Microsoft's beta is 0.78. If the risk-free rate is 5%, and the expected return of the market portfolio is 10%, what is the expected return of the portfolio with 60% investment in Tesla and 40% investment in Microsoft? (Hint: Use CAPM) 12.44% 11.85% 14.80% 8.90%
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