Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please solve using excel EE eBook The stock of Jones Trucking is expected to return 12 percent annually with a standard deviation of 8 percent.

please solve using excel
image text in transcribed
EE eBook The stock of Jones Trucking is expected to return 12 percent annually with a standard deviation of 8 percent. The stock of Bush Steel Mills is expected to return 12 percent annually with a standard deviation of 14 percent. The correlation between the returns from the two securities has been estimated to be +0.3. The beta of the Jones stock is 0.8, and the beta of the Bush stock is 1.1. 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 $5. The current dividend for Bush is $7. a. What is the expected return from a portfolio containing the two securities ir 30 percent of your wealth is invested in Jones and 70 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 stock is the better buy because the expected return is Select than the required retum 90

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_2

Step: 3

blur-text-image_3

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

Probability For Risk Management

Authors: Matthew J. Hassett, Donald G. Stewart

2nd Edition

156698548X, 978-1566985482

More Books

Students also viewed these Finance questions

Question

Explain the serial-position curve and why it occurs.

Answered: 1 week ago