Suppose Intels stock has an expected return of 26 and a volatility of 50 , while Coca Colas has an expected return of 6 and volatility of 25 If these two stocks were perfectly negatively correlated (i e , their correlation coefficient is 1), a Calculate the portfolio weights that remove all risk b ...

a If the two stocks are perfectly correlated negatively they fluc ...

Suppose Intels stock has an expected return of 26% and a volatility of 50%, while Coca-Colas has

Question:

Suppose Intel’s stock has an of 26% and a volatility of 50%, while Coca-Cola’s has an of 6% and volatility of 25%. If these two were perfectly negatively correlated (i.e., their correlation coefficient is -1),
a. Calculate the weights that remove all risk.
b. If there are no arbitrage opportunities, what is the risk-free rate of interest in this economy?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...