Answered: E(r) SD Covariance Matrix A B с 0.19…

E(r) SD Covariance Matrix A B с 0.19 0.21 A 0.0441 0.0095 0.0076 0.15 0.15 B 0.0095 0.0225 0.0054 0.06 0.12 C 0.0076 0.0054 0.0144 ABC

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 2RE: Match the following items with correct accounting treatment (A through C):

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Question

You are managing a stock portfolio for a client that contains three assets, A, B, C. You currently hold each in equal proportion and the portfolio has the following characteristics:

Your client asks you to add a 4th asset to the portfolio. The new portfolio will hold all assets in equal proportion. You have identified a potential asset, X. Asset X has an expected return of 12%, a Std. deviation of 36% and a correlation with all other assets in the portfolio of 0.