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Asset X Asset Y E(R) = 8% E(R,) - 18% E(s.) = 7% E(s,) - 25% Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 allocation in Asset X is 0.65. Select one: O a. 11.5% and 15.17% O b. 11.5% and 11.71%

Asset X Asset Y E(R) = 8% E(R,) - 18% E(s.) = 7% E(s,) - 25% Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 allocation in Asset X is 0.65. Select one: O a. 11.5% and 15.17% O b. 11.5% and 11.71%

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...
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Asset X Asset Y E(Rx) = 8% E(Ry) = 18% E(sx) = 7% E(sy) = 25% Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 and the allocation in Asset X is 0.65. Select one: O a. 11.5% and 15.17% O b. 11.5% and 11.71% O c. 14.5% and 11.71% O d. 11.5% and 7.58% You purchased 5000 shares of common stock on margin for $8 per share. The initial margin is 60% and the stock pays no dividend. Estimate your rate of return if you sell the stock at $10.50 per share. Ignore interest on margin. Select one: O a. 52.1% O b. 31.3% O c. 18.8% O d. 78.1%
Transcribed Image Text:Asset X Asset Y E(Rx) = 8% E(Ry) = 18% E(sx) = 7% E(sy) = 25% Calculate the expected return and expected standard deviation of a two-stock portfolio when the correlation is -0.50 and the allocation in Asset X is 0.65. Select one: O a. 11.5% and 15.17% O b. 11.5% and 11.71% O c. 14.5% and 11.71% O d. 11.5% and 7.58% You purchased 5000 shares of common stock on margin for $8 per share. The initial margin is 60% and the stock pays no dividend. Estimate your rate of return if you sell the stock at $10.50 per share. Ignore interest on margin. Select one: O a. 52.1% O b. 31.3% O c. 18.8% O d. 78.1%
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