Homework: Module 9: Chapters 10 and 11 - Risk and Return, Po Sav Score: 0.33 of 1 pt 23 of 26 (23 completo) HW Score: 82.0596, 21.33 of 26 p P11-41 (similar to) Question Help You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 15% with a volatility of 22%. Currently, the risk tree rate of interest is 3.1% Your broker suggests that you add Hannah Corporation to your portfolio Hannah Corporation has an expected return of 19%, a volatility of 61%, and a correlation of Ozero) with the Natasha Fund a. Calculate the required return of Hannah stock. Is your broker right? b. You follow your broker's advice and make a substantial investment in Hannah stock so that considering only your risky investments, 63% is in the Natasha Fund and 37% in Hannah stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah Recalculate the required retum on Hannah stock. Is your finance professor right? c. You decide to follow your finance professor's advice and reduce your exposurd to Hannah. Now Hannah represents 14.306% of your risky portfolio with the rest in the Natasha fund Recalculate the required return on Hannah stock. Is this the correct amount of Hannah stock to hold? Hint Make sure to round an intermediate calculations to at least five decimal places Yes, because the expected return of Hannah stock excends the required retum b. You follow your brokers advice and make a substantial investment in Hannah stock so that considering only your risky investments, 63% in the Natasha Fund and 37% is in Hanna stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah Recalculate the required retum Hannah stock Round an intermediate values to five decimal places as needed) The required entum of Hannah stock ix Round to one decimal place) Enter your answer in the answer box and then click Check Answer Clearn 3 parts Homework: Module 9: Chapters 10 and 11 - Risk and Return, Po Sav Score: 0.33 of 1 pt 23 of 26 (23 completo) HW Score: 82.0596, 21.33 of 26 p P11-41 (similar to) Question Help You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 15% with a volatility of 22%. Currently, the risk tree rate of interest is 3.1% Your broker suggests that you add Hannah Corporation to your portfolio Hannah Corporation has an expected return of 19%, a volatility of 61%, and a correlation of Ozero) with the Natasha Fund a. Calculate the required return of Hannah stock. Is your broker right? b. You follow your broker's advice and make a substantial investment in Hannah stock so that considering only your risky investments, 63% is in the Natasha Fund and 37% in Hannah stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah Recalculate the required retum on Hannah stock. Is your finance professor right? c. You decide to follow your finance professor's advice and reduce your exposurd to Hannah. Now Hannah represents 14.306% of your risky portfolio with the rest in the Natasha fund Recalculate the required return on Hannah stock. Is this the correct amount of Hannah stock to hold? Hint Make sure to round an intermediate calculations to at least five decimal places Yes, because the expected return of Hannah stock excends the required retum b. You follow your brokers advice and make a substantial investment in Hannah stock so that considering only your risky investments, 63% in the Natasha Fund and 37% is in Hanna stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah Recalculate the required retum Hannah stock Round an intermediate values to five decimal places as needed) The required entum of Hannah stock ix Round to one decimal place) Enter your answer in the answer box and then click Check Answer Clearn 3 parts
