Business
Engineering
Math
Science
Social Science4.You want to combine the following two stocks into a portfolio: Nike and Microsoft. Thelast seven years of returns are listed below. The correlation between the two stocks is0.65. You willput 54% of your money into Nike and 46% into Microsoft. What wouldbe the expected return and standard deviation of returns of your portfolio?3a-7%a3%a402052%40%a-15%aa1%a19%a12%a14%aNike22%a24%aMicrosofta16%a-8%-7%a
I am stuck on how to do this problem and I need to understand how to set it up in excel with formulas.
Image Transcriptionclose
4.You want to combine the following two stocks into a portfolio: Nike and Microsoft. The last seven years of returns are listed below. The correlation between the two stocks is 0.65. You willput 54% of your money into Nike and 46% into Microsoft. What would be the expected return and standard deviation of returns of your portfolio? 3a -7%a 3%a 40 20 52% 40%a -15%aa 1%a 19%a 12%a 14%a Nike 22%a 24%a Microsofta 16%a -8% -7%a
Expert Answer
Calculation of Expected Return and Standard Deviation of Portfolio:
The expected return of portfolio is 12.02% and standard deviation of portfolio is 19.61%.
Excel Sprea...
Image Transcriptionclose
А В C E Variance of Returns 1 Year 2 Company Microsoft Microsoft 0.0026449 0.0318878 0.0003449 0.0284163 0.0435020 0.0047020 0.1454878 0.0908592 0.0066306 0.0200020 0.0000020 0.0037735 0.0832735 0.0078449 Nike Nike -8% 19% 12% -7% 2 -7% 5 3% 40% 6 4 52% 7 5 22% 24% 14% 8 6 16% 7 -15% 1% Average Returns Portfolio Weights 13.86% 10 9.86% 54% 11 46% Total Variance of Returns 0.28189 12 0.18749 Standard Deviation of Returns 53.09% 13 43.30% 0.65 14 Correlation Expected Return of Portfolio 15 12.02% 19.61% 16 Standard Deviation of Portfolio lco t
Business
Finance
Related Finance Q&A
Q: Summarize and discuss the implications of the findings for the business or potential business transa...
A: The present value of the stock is calculated on the basis of future dividend payments. All future di...
Q: Avril Synchronistics will pay a dividend of $1.50 per share this year. It is expected that this divi...
A: Computation of current value of share:Current value of share is $13.64.
Q: True or False? cash flows to and from creditors and owners include changes in equity and debt
A: Cash flow from creditors increases the debt and cash flow to creditors decreases the debt while cash...
Q: wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. the firm al...
A: Computation of the weighted average cost of capital:Hence, the weighted average cost of capital is 8...
Q: 8. A credit card company determines a card holder's minimum monthly payment by adding all new intere...
A: a.) Computation:Hence, the minimum due as on December 1st is $34.55.
Q: our firm is considering purchasing a machine with the following annual, end-of-year, book investment...
A: To determine the average accounting return we need to divide the average investment with the average...
Q: WhackAmOle has 4 million shares of common stock outstanding, 3.0 million shares of preferred stock o...
A: It is given that,Total number of common stock outstanding are 4,000,000 shares.Price of each common ...
Q: true or false? if we choose to use company's WACC in the calculation of the NPV of a project, we are...
A: Answer: True
Q: Your company is currently considering two investment projects. Each project requires an upfront expe...
A: Payback period refers to the time period required for a project to recover its initial cash outflow....
