Question
Ms. Chan has picked 2 stocks to invest in: Wings Limited and Happy Group. Ms. Chan decides to invest $200,000 in Wings Limited and 300,000
Ms. Chan has picked 2 stocks to invest in: Wings Limited and Happy Group. Ms. Chan decides to invest $200,000 in Wings Limited and 300,000 in Happy Group in her portfolio. Some information about the 2 stocks is shown in the table below:
| Expected Return | Standard Deviation | Covariance |
Wings Limited | 15% | 28% | 0.0112 |
Happy Group | 6% | 11% | |
Inflation rate is 2% p.a. | |||
Risk-free rate is 3% p.a. |
A.Calculate the expected return of Ms. Chans portfolio.
B.Calculate the standard deviation of Ms. Chans portfolio.
C.Calculate the risk premiums of Wings Limited and Happy Group.
D.Calculate the correlation coefficient of Wings Limited and Happy Group.
E.If Ms. Chan wants to achieve an expected return of 11.4% for her portfolio, how much (in percentage) should she invest in Wings Limited and Happy Group?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started