Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with Duke Energy Correlation

Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations:

Stock Expected Return Standard Deviation Correlation with Duke Energy Correlation with Microsoft Correlation with Wal-Mart
Duke Energy 14% 6% 1.0 -1.0 0.0
Microsoft 44% 24% -1.0 1.0 0.7
Wal-Mart 23% 14% 0.0 0.7 1.0

The expected return of a portfolio that consists of a long position of $10,000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:

a.12%

b.27%

c.18%

d.21%

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

Step: 3

blur-text-image

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

Innovation And Technology

Authors: Nikos Vernardakis

1st Edition

0415676800, 978-0415676809

More Books

Students also viewed these Finance questions

Question

What do you need to know about your students to motivate them?

Answered: 1 week ago

Question

politeness and modesty, as well as indirectness;

Answered: 1 week ago