The return of a two-stock portfolio is Select one: Ohigher, if the correlation of two stocks is high. Ohigher, if the correlation of two stocks is low. Cindependent from correlation. the standard deviation multiplied by the expected return.

The probability distribution of returns for the two stocks X and Y are as follows: Probability 0.1 0.3 0.05 0.25 0.15 0.15 For each of the two stocks, calculate: a. The expected return. b. Variance of returns c. Volatility of returns. Stock X 0.05 -0.1 0.08 -0.08 0.20 0.12 Return Stock Y 0.13 0,04 -0.12 0.21 0.1 -0.05

Given:   Calculate the expected returns and expected standard deviations of a two-stock portfolio having a correlation coefficient of 0.70 under the following conditions a. w1 = 1.00 b. w1 = 0.75 c. w1 = 0.50 d. w1 = 0.25 e. w1 = 0.05 Plot the results on a return-risk graph. Without calculations, draw in what the curve would look like first if the correlation coefficient had been 0.00 and then if it had been −0.70.

Consider information given in the table below and answers the question asked thereafter: State Probability  return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% Calculate covariance and coefficient of correlation between the returns of thestocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfoliocomprising of $45,000 invested in stock A and remaining amount in stock B.Calculate risk and return of your portfolio.

The beta of a portfolio​ is:   A. A measure of the correlation of betas of the securities in the portfolio.   B. Always greater than one.   C. The market value weighted average beta of the securities in the portfolio.   D. The geometric average of the beta of the securities in the portfolio.

Suppose you have the following expectations about the market condition and the returns on Stocks X and Y.   a)  What are the expected returns for Stocks X and Y, E(rX) and E(rY)? b)  What are the standard deviations of the returns for Stocks X and Y, σX and σY?

Which of the following measures the total risk of a​ portfolio?   A. Standard Deviation   B. Correlation Coefficient   C. Beta   D. Alpha

Using the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks.

When working with the CAPM, which of the following factors can be determined with the most precision?   a. The most appropriate risk-free rate, rRF.     b. The market risk premium (RPM).     c. The beta coefficient, bi, of a relatively safe stock.     d. The expected rate of return on the market, rM.     e. The beta coefficient of "the market," which is the same as the beta of an average stock.

A person is interested in constructing a portfolio. Two stocks are being considered. Letx = percent return for an investment in stock 1, and y = percent return for an investment instock 2. The expected return and variance for stock 1 are e(x) = 8.45% and Var(x) = 25.The expected return and variance for stock 2 are e(y) = 3.20% and Var(y) = 1. Thecovariance between the returns is sxy = −3.a. what is the standard deviation for an investment in stock 1 and for an investment instock 2? Using the standard deviation as a measure of risk, which of these stocks isthe riskier investment?