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please show work and ewuations in excel The stock of Jones Trucking is expected to return 12 percent annually with a standard deviation of 4
please show work and ewuations in excel
The stock of Jones Trucking is expected to return 12 percent annually with a standard deviation of 4 percent. The stock of Bush Steel Mills is expected to return 13 percent annually with a standard deviation of 10 percent. The correlation between the returns from the two securities has been estimated to be +0.5. The beta of the Jones stock is 0.9, and the beta of the Bush stock is 1.2. The risk-free rate of return is expected to be 5 percent, and the expected return on the market portfolio is 12 percent. The current dividend for Jones is $3. The current dividend for Bush is $5. a. What is the expected return from a portfolio containing the two securities if 60 percent of your wealth is invested in Jones and 40 percent is invested in Bush? Round your answer to one decimal place. % b. What is the expected standard deviation of the portfolio of the two stocks? Round your answer to two decimal places. % c. Which stock is the better buy in the current market? Round your answers to one decimal place. Required return (Jones): % Required return (Bush): % The -Select- v stock is the better buy because the expected return is -Select- v than the required return Step by Step Solution
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