Compute the weights in a portfolio

Q: What is the variance of the returns on a portfolio that is invested 60 percent in stock S and 40…

A: The variance of a portfolio is the total risk of the portfolio arising out of expected returns of…

Q: Stocks X and Y have the following probability distributions of expected future returns: Calculate…

A: Standard deviation: The standard deviation is a measurement of the variance or dispersion of a set…

Q: Suppose the risk-free rate is 5.1 percent and the market portfolio has an expected return of 11.8…

A: Standard deviation of market portfolio and portfolio Z is calculated. Then covariance and beta of…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: The question is based on the concept of systematic risk and firm specific risk for individual…

Q: Suppose Stock A has an expected return of 18% and a variance of 0.17, while Stock B has an expected…

A: Expected return of a portfolio is calculated as the sum of their weighted returns. It can be…

Q: The analysts at FNB forecasted that the return on DJIA index portfolio over the coming year will be…

A: The degree of risk aversion of the average investors can be denoted as Beta. Variance of returns…

Q: b) Assume that Assets I has an expected returm of 15% with standard deviation of 30% and asset 2 has…

A: The minimum variance portfolio: Markowitz's modern portfolio theory states that investors are…

Q: Stock W's standard coefficient of variance (CV) is Stock W’s Sharpe ratio assuming the risk-free is…

A: 1. Calculation of Stock W's Expected return and Standard Deviation State of Economy Probability…

Q: a. What is the expected return of each asset? b. What is the variance and the standard deviation c.…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Suppose the risk-free return is 4.1% and the market portfolio has an expected return of 9.3% and a…

A: In CAPM; Capital Asset Pricing Model, the expected return for a single stock is ascertained by…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: Given information: Beta of stock A is 0.50 Beta of stock B is 0.70

Q: A stock is estimated to have a covariance with the market of 0.45. For the coming period, the market…

A: The Capital assets pricing model shows the relationship between the risk-free rate and the expected…

Q: Suppose that Jerry Tan has surplus funds to invest in both stocks, Alpha and Beta. He has decided to…

A: For Stock: Expected return E(r) = ∑p*r Standard deviation = √∑p*(r-E(r))2  For portfolio: Expected…

Q: Suppose the risk-free return is 4.2% and the market portfolio has an expected return of 11.4% and a…

A: Expected return = Risk free rate + beta * (market return -risk free rate )

Q: How many variance terms and how many covariance terms do you need to calculate the risk of a…

A: According to the rule, because you have posted multiple questions , we will answer the first…

Q: Your rate of return expectations for the stock of Gidimadjor Company during the next year are…

A: As per Q&A guidelines, We will answer first three subparts when multiple subparts given under…

Q: 1. Calculate the expected return and standard deviation of a portfolio that is 80% Large Cap Stocks…

A:

Q: two variances and Cov (r1, r2). If assets 1 and 2 are combined 50-50 into a portfolio, what is the…

A: Risk is measured via Variance, that is Standard Deviation square. Variance is the average of the…

Q: Need help on all

A: Hi there, Thanks for posting the question. As per Q&A Guidelines, we should answer the first…

Q: The expected return (ER) for Stock A is 45% and the expected return for Stock B is 32% while the…

A: GIVEN, RA=45%RB=32%σA=37%σB=29%CORRE=0.2

Q: An analyst has modeled the stock of Crisp Trucking using a two-factor APTmodel. The risk-free rate…

A: Factor 1: Risk premium r1p =Expected return of factor 1 - Risk free rate Risk premium r1p = (12% -…

Q: How many variance terms and how many covariance terms do you need to calculate the risk of a…

A: The variance of the portfolio is used to measure the variability in the return of the portfolio. in…

Q: he expected return (ER) for Stock A is 45% and the expected return for Stock B is 32% while the…

A: given, ra=45%rb=32%σa=37%σb=29%correl= 0.2

Q: vests W0=$10000W0=$10000 on a stock. The monthly return RR follows a normal distribution with mean…

A: Value at risk is related to amount of investment that is at the risk.

Q: Calculate the expected return, variance, and standard deviation for a portfolio of four equally…

A: The expected return of the portfolio is the return that an investor gets based on the weightage…

Q: Consider the following probability distribution of returns for Alpha Corporation: Current Stock…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Return if State Occurs Stock C State of Economy Probability of State of Economy Stock B Boom 5% 20%…

A:

Q: Stock A has a return variance (that is σ2) of 0.02. The market portfolio has a return variance of…

A: given, σA2=0.02σM2=0.03cov =  0.01ra=0.09rm=0.12wa=0.65wm=0.35

Q: The probability distributions of expected returns for stocks XMX and BMX are as follows: Probability…

A: Let Pn = Probability of each state Xn = Return of XMX in each state Bn = Return of BMX in each state…

Q: on A Return on B Boom .20 20% 5% Normal .50 10% 8% Bust .30 8% 12% What is the variance of a…

A: Portfolio management is the process of selecting, prioritizing, and controlling an organization's…

Q: Consider the following information: State of Rate of Return if State Occurs Probability of State of…

A: The expected return on the portfolio indicates the returns on investment of investors. It's…

Q: Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Your rate of return expectations for the stock of Kayleigh Cosmetics Company during the next year…

A: Expected return shows possible return from the stock and standard deviation shows risk assign in…

Q: Use the following information: ElrXOM E[TMS)=29.7%, standard deviationMS = 35.2% = 15.6%, standard…

A: Weight of XOM is 0.43 and weight of MS is 1-0.43= 0.57

Q: Suppose you invest 60% of your portfolio in exxon mobil and 40% in coca cola. The expected dollar…

A: Portfolio is the result of several assets put together in order to have balanced return. In…

Q: Suppose that optimal risky portfolio has an expected return of 16% and a variance of 0.04. The…

A: CML shows the relationship between standard deviation of various investments and expected return by…

Q: You have a portfolio which consists of 75% of stock 1 (o^2 = 0.16) and 25% of stock 2 (o^2 = 0.09).…

A: Return on the stock is based on the risk free rate, market return and the risk associated with the…

Q: Suppose the risk-free return is 4.5% and the market portfolio has an expected return of 10.3% and a…

A: According to the market scenario, the stock prices are keep on changing with the changing market…

Q: Consider the following information about three stocks: Rate of Return If State Occurs Probability of…

A: Hi There, Thanks for posting the question. As per Q&A guidelines, the solution for first three…

Q: What is the standard deviation of this portfolio?

A: Information Provided: Correlation = -0.10 Standard Deviation of Stock A = 3.0 Standard Deviation of…

Q: Consider the following information on returns and probabilities: ▪ Invest 50% of your money in Asset…

A: Expected return of an asset is the minimum required rate of return that an investor expects from the…

Q: Using the single factor model for firm with a Beta of 1 and when the standard deviation of the…

A: Solution- A- Since the beta of the firm is 1 ,The standard deviation of the firm equal to the…

Q: Assume the risk-free rate is r = 3%. Consider the data below: Stock(stock 1, stock 2) Expected…

A: Weight of stock 1 (W1) =σ22-ρ12σ1σ2σ21+σ22-2ρ12σ1σ2=(30)2-0×40×30(30)2+(40)2-2×0×40×30=9002500=0.36…

Q: A risk manager estimates daily variance o, using a GARCH model on daily returns u;: o? = w + auf-, +…

A: The GARCH model is a financial model that is used to measure and analyze different types of…

Q: Consider the one-factor APT. The variance of returns on the factor portfolio is 6%. The beta of a…

A: Variance of returns on the well diversified portfolio ={(Beta)^2}*(Variance of returns on the factor…

Q: The yield of stock A will be 0.30 with 40% probability and 0.50 with 60% probability. Stock B has a…

A: Expected return E(r) = ∑p*r Standard deviation = √∑p*(r-E(r))2  Expected return on portfolio E(Rp) =…