Question
Susie is analyzing the stock characteristics of Chune-Best's stake.The following is the return on Chune-Best stock over the past four years: 1 year 2 year
Susie is analyzing the stock characteristics of Chune-Best's stake.The following is the return on Chune-Best stock over the past four years:
1 year
2 year
3 year
4 year
40%
20%
30%
10%
1.Based on the above data, what is the expected annualized return on Chune-Best shares?
2.What is the standard deviation of expected return on Chune-Best stock?
3.Minsu intends to build a portfolio in which 50% of its current investment is invested in Chune-Best stocks with the characteristics shown in Question 3 and the remaining 50% in Ford Motor stocks. Ford shares are expected to average an annual return of 9%, with a standard deviation of 27%.In addition, suppose that the correlation coefficient between the two stocks is -0.15, and find the expected return and standard deviation of the portfolio Minsu is considering.
Susie is analyzing the stock characteristics of Chune-Best's stake.The following is the return on Chune-Best stock over the past four years:
1 year | 2 year | 3 year | 4 year |
40% | 20% | 30% | 10% |
1.Based on the above data, what is the expected annualized return on Chune-Best shares?
2.What is the standard deviation of expected return on Chune-Best stock?
3.Minsu intends to build a portfolio in which 50% of its current investment is invested in Chune-Best stocks with the characteristics shown in Question 3 and the remaining 50% in Ford Motor stocks. Ford shares are expected to average an annual return of 9%, with a standard deviation of 27%.In addition, suppose that the correlation coefficient between the two stocks is -0.15, and find the expected return and standard deviation of the portfolio Minsu is considering.
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