Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 19, 2024

Portfolio M consists of two stocks : 50 % is invested in Stock A and 50% is invested in Stock B. Stock A has a

Portfolio M consists of two stocks : 50 % is invested in Stock A and 50% is invested in

Stock B. Stock A has a standard deviation of 25% and a beta of 1.2, and Stock B has a

standard deviation of 35% and a beta of 0.80. The correlation between these stocks is 0.4.

a)Compute the standard deviation of Portfolio M.

b)Calculate the beta of Portfolio M.

c)Which stock is riskier to a diversified investor?Why?

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

Recommended Textbook for

Finance for Executives Managing for Value Creation

Authors: Gabriel Hawawini, Claude Viallet

4th edition

9781133169949, 538751347, 978-0538751346

More Books

Students also viewed these Finance questions

Question

Please help. I did this project for class and my professor gave me this feedback. "I cannot determine which problems you solved, nothing is labeled.You also need to clearly label data and use cell...

Answered: 1 week ago

Question

help mi with my questions 21. There are three assets, A, B and C, where A is the market portfolio and C is the risk-free asset. The return on the market has a mean of 12% and a standard deviation of...

Answered: 1 week ago

Question

I need your help with this: Can you please quote from the attached chapters / resource if possible? Corporations often use different costs of capital for different operating divisions. Using an...

Answered: 1 week ago

Question

★★★★★

George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000 this year (before the domestic production activities deduction). Included in income was...

Answered: 1 week ago

Question

★★★★★

It is important to study the effect of concentration of the reactant and the feed rate on the viscosity of the product from a chemical process. Let the reactant concentration be factor A at levels...

Answered: 1 week ago

Question

★★★★★

Identify the two strategies that a firm could use to develop a marketing mix for international markets. What are the upsides and downsides of each?

Answered: 1 week ago

Question

★★★★★

3. Investigate a research opportunity within your undergraduate program or one at a neighboring institution. Contact a faculty member whose research interests you and have a conversation with them...

Answered: 1 week ago

Question

★★★★★

Evaluate IBMs approach to leading mature, high growth, and emerging business opportunities. What are the organization design and leadership models required to manage each type of business? How should...

Answered: 1 week ago

Question

★★★★★

John and Jessica are married and have one dependent child, Liz. Liz is currently in college at State University. John works as a design engineer for a manufacturing firm while Jessie runs a craft...

Answered: 1 week ago

Question

★★★★★

Vulcan Service Company experienced the following transactions for Year 1, its first year of operations: 1. Provided $68,000 of services on account. 2. Collected $40,800 cash from accounts receivable....

Answered: 1 week ago

Question

★★★★★

1. The Fagersta Steelworks currently is working two mines to obtain its iron ore. This iron ore is shipped to either of two storage facilities. When needed, it then is shipped on to the companys...

Answered: 1 week ago

Question

★★★★★

Research on the current trends on the Supply Chain Processes (SCP): Information Systems and Information Technology. Based upon your analysis, present at least three examples, about...

Answered: 1 week ago

Question

★★★★★

After reading Case 1 4 . 1 ( Gender and Leadership. page 4 1 0 ) , respond to the followng questions Q 1 : What advancement barriers did Lisa encounter? Q 2 : What should the firm\'s top executives...

Answered: 1 week ago

Question

★★★★★

b) Consider a 36 MW steam power plant operates on a simple ideal Rankine cycle between the pressure limits of 25 bar and 0.5 bar. The dryness fraction of the steam at the turbine exit is 90%. The...

Answered: 1 week ago

Question

★★★★★

A few years ago ValuChain Company sold a $1,000 par value, noncallable bond that now has 15 years to maturity and a 5.00% annual coupon that is paid semiannually. The bond currently sells for $920...

Answered: 1 week ago

Question

★★★★★

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.99 million and create incremental cash flows of $855,036.00 each year...

Answered: 1 week ago

Question

★★★★★

Question 2 For an n x n matrix A = form) via (aij)

Answered: 1 week ago

Question

★★★★★

Pollution. A company with a f leet of 150 cars found that the emissions systems of 7 out of the 22 they tested failed to meet pollution control guidelines. Is this strong evidence that more than 20%...

Answered: 1 week ago

Question

★★★★★

Take the offer. First USA tested the effectiveness of a double miles campaign by recently sending out offers to a random sample of 50,000 cardholders. Of those, 1184 registered for the promotion....

Answered: 1 week ago

Question

★★★★★

Educated mothers. The National Center for Education Statistics monitors many aspects of elementary and secondary education nationwide. Their 1996 numbers are often used as a baseline to assess...

Answered: 1 week ago

Previous Question Next Question