You are allocating your wealth between two shares, GoldenClaw and Syldavian Industries. GoldenClaw has volatility 58.20%, while Syldavian Insustries has volatility 41.60%. The correlation beteween the two shares' returns is 0.56. What percentage of your wealth should you allocate to GoldenClaw to minimise your portfolio's volatility?
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You are allocating your wealth between two shares, GoldenClaw and Syldavian Industries. GoldenClaw has volatility 58.20%, while Syldavian Insustries has volatility 41.60%. The correlation beteween the two shares' returns is 0.56. What percentage of your wealth should you allocate to GoldenClaw to minimise your portfolio's volatility?
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- You are allocating your wealth between two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 36.10%, while Circumbendibus Wheels has volatility 57.30%. The correlation beteween the two shares' returns is 0.34. What percentage of your wealth should you allocate to Tinkle.com to minimise your portfolio's volatility?What is the beta of a portfolio consisting of one share of each of the following stocks, given their respective prices and beta coefficients? Stock Pricd Beta A $10 1.4 B $24 0.8 C $41 1.3 D $19 1.8 How would the portfolio beta differ if (a) the invesstor purchased 200 shares of stocks B and C for every 100 shares of A and D and (b) equal dollar amounts were invested in each stock?You are examining three different shares. Share A has expected return 6.20%, beta 0.47, and volatility 12.00%. Share B has expected return 4.90%, beta 0.19, and volatility 20.00%. Finally, share C has expected return 9.60%, beta 0.84, and volatility 30.00%. The risk free rate is 2.90%, while the market price of risk is 8.50%. According to the CAPM, which share is undervalued?
- On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor? _______________ Calculate the required return of a portfolio that has $6,000 invested in Stock X and $5,000 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp = __________% If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?Suppose General Motors stock has an expected return of 19% and a volatility of 40%, and Molson-Coors Brewing has an expected return of 11% and a volatility of 30%. If the two stocks are uncorrelated, a. What is the expected return and volatility of a portfolio consisting of 72% General Motors stock and 28% of Molson-Coors Brewing stock? b. Given your answer to (a), is investing all of your money in Molson-Coors stock an efficient portfolio of these two stocks? c. Is investing all of your money in General Motors an efficient portfolio of these two stocks?you have invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 38.20%, while Circumbendibus Wheels has volatility 35.90%. The correlation between the two shares' returns is 0.44. You have allocated 50.00% of your money to Tinkle.com. What is the volatility of your portfolio?
- The possible returns from investing in BestMax share are as follows: State of economy Probability of state of economy Return if state occurs Strong 0.26 96% Normal 0.51 12% Weak 0.23 -83% Based on the above information, calculate the following for BestMax shares: a. Standard deviation of return b. Coefficient of variation c. What does the coefficient of variation reveal about an investment's risk that the standard deviation does not? Explain. d. What is 'risk' in the context of financial decision making? Explain.A hedge fund has created a portfolio using just two stocks. It has shorted $34,000,000 worth of Oracle stock and has purchased $77,000,000 of Intel stock. The correlation between Oracle's and Intel's returns is 0.63. The expected returns and standard deviations of the two stocks are given in the following table below. Suppose the correlation between Intel and Oracle's stock increases, but nothing else changes. Would the portfolio be more or less risky with this change?You want to allocate your money between the risk free asset (0.015), a fixed income fund ( E(B)=0.079, Volatility(B)=0.11), and a diversified stock fund ( E(S)=0.116, Volatility(S)=0.18). The correlation between the two risky funds is 0.57. When creating the optimal risky portfolio, how much weight in decimals should you invest in the diversified stock fund?
- You currently hold a portfolio of three stocks, Delta, Gamma, and Omega. Delta has a volatility of 36%, Gamma has a volatility of 55%, and Omega has a volatility of 52%. Suppose you invest 70% of your money in Delta, and 15% each in Gamma and Omega. a. What is the highest possible volatility of your portfolio? b. If your portfolio has the volatility in (a), what can you conclude about the correlation between Delta and Omega? ..Suppose Target's stock has an expected return of 22% and a volatility of 40%, Hershey's stock has an expected return of 15% and a volatility of 26%, and these two stocks are uncorrelated. a. What is the expected return and volatility of an equally weighted portfolio of the two stocks? Consider a new stock with an expected return of 18.5% and a volatility of 30%. Suppose this new stock is uncorrelated with Target's and Hershey's stock. b. Is holding this stock alone attractive compared to holding the portfolio in (a)? c. Can you improve upon your portfolio in (a) by adding this new stock to your portfolio? Explain.Suppose Johnson & Johnson and the Walgreen Company have expected returns and volatilities shown below, with a correlation of 22%. Calculate the expected return of a portfolio that is equally invested in J&J and Walgreen’s stock. Calculate the volatility (standard deviation) of a portfolio that is equally invested in Johnson & Johnson’s and Walgreen’s stock.
