Question
please show work Problem 1: Assume the expected return for Exxon is 14% and that of Walmart is 23%. You have 40% of your stock
please show work
Problem 1:
Assume the expected return for Exxon is 14% and that of Walmart is 23%. You have 40% of your stock invested in Exxon and 60% invested in Walmart. Assume the annual standard deviation of returns is 35% for Exxon and 54% for Walmart. The correlation between Intel and ATP is 0.25.
- What is the expected return of your portfolio?
- What is the standard deviation for the portfolio?
Problem 2:
Suppose the market portfolio tends to increase by 36% when the economy is strong and decline by 17% when the economy is weak. A stock's return is 47% on average when the economy is strong and 20% when the economy is weak. Calculate the beta of the stock.
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