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You own three stocks: 1,000 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Goldman Sachs. The current share prices and
You own three stocks: 1,000 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Goldman Sachs. The current share prices and expected returns of Apple, Cisco, and Goldman Sachs are, respectively, $177,$16,$128 and 12%,10%,10.5%. c. Suppose the price of Apple stock goes up by $6, Cisco rises by $4, and Goldman Sachs falls by $10. What are the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices? Suppose Biovail and the Shoppers Drug Mart have expected returns and volatilities shown below, with a correlation of 24%. Calculate b) the volatility (standard deviation) of a portfolio that is equally invested in Biovail's and Shoppers Drug Mart's stock. b. Calculate the volatility (standard deviation). The volatility is %. (Round to one decimal place.)
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