Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following are monthy percentage price changes for four mokket indeses compute the following: 3. Averose monthily tate of retuen for esch index. Round your
The following are monthy percentage price changes for four mokket indeses compute the following: 3. Averose monthily tate of retuen for esch index. Round your answers to five decimal places. OIIA: sin500: Russell 20001 Nukeiri b. Standard doviation for each index, Do not round intermediate calculations. Round your answers to four decimal places. D)itht. sse500: Resseli 2000 Nikieri, c. Cowariance between the rates of return for the folfowing indexes. Use a minus sign to enter negative valuel, if any. Do not round intermediate caiculationsif Round your answers to so decimal otaces. Covariance (0)14, SQP 500) Covariance (SNP) 500, Russell 2000) c. Covariance between the rates of return for the following indexes. Use a minus sign to enter negative values, if any. Do not round intermed ate calculations Round your answers to six decimal nlaces. Covariance (DJLA, S\&P 500): Covariance (S8P 500, Russell 2000): Covarlance (S8P 500, Nikkel): Covariance (Russell 2000, Nikkei): d. The correlation coefficients for the same four combinations. Use a minus sign to enter negative values, if any, Do not round intermediate calculitions. Roind your answers to four decimal nlarne. Correlation (D.JtA, 5%P,500) : Correlation (S3P 500, Russell 2000): Correlation (S8P 500, Nikkei): Correlation (Russell 2000, Nikkel): e. Using the unrounded answers from parts (a), (b), and (d), calculate the expected return and standard deviation of a portfolio consiting of equal parts of (1) the 58P and the Russell 2000 and (2) the Sap and the Nikkel. Do not round intermediate calculations. Round your answers to five decimal places. Expected return (S\&P 500 and Russell 2000): Standard deviation (S5.P 500 and Russell 2000): Expected return (SAP. 500 and Nikkel): Standard deviotion (Ses 500 and Nhkei): Since Sap 500 and Russell 2000 have a strong correlation, meaningful reduction in risk If they are combined. Since 58p500 and Nikkei have a strong correlation, meaningful reduction in risk it they are combined
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