(a)
To find: The standard deviations for the investments in stock 1 and stock 2. And, identify the stock that is the riskier investment using the standard deviation.
(b)
To find: The expected return and standard deviation for a person who is investing $500 in stock 1.
(c)
To find: The expected percent return and standard deviation for an individual who is constructing a portfolio by having 50% in both the stocks.
(d)
To find: The expected percent return and standard deviation for an individual who is constructing a portfolio by having 70% in stock 1 and 30% in stock 2.
(e)
To find: The value of the
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Essentials of Modern Business Statistics with Microsoft Office Excel (Book Only)
- Suppose that the index model for two Canadian stocks HD and ML is estimated with the following results: RHD =-0.03+2.10RM+eHD R-squared =0.7 RML =0.06+1.60RM+eML R-squared =0.6 σM =0.15 where M is S&P/TSX Comp Index and RX is the excess return of stock X. What is the covariance and the correlation coefficient between HD and ML? For portfolio P with investment proportion of 0.4 in HD and 0.6 in ML, calculate the systematic risk, non-systematic risk, and total risk of P.arrow_forwardSuppose that the index model for two Canadian stocks HD and ML is estimated with the following results: RHD =-0.03+2.10RM+eHD R-squared =0.7 RML =0.06+1.60RM+eML R-squared =0.6 σM =0.15 where M is S&P/TSX Comp Index and RX is the excess return of stock X. What is the covariance and the correlation coefficient between HD and ML?arrow_forwardINV 2-3c Suppose that the index model for two Canadian stocks HD and ML is estimated with the following results: RHD =0.02+0.80RM+eHD R-squared =0.6 RML =-0.03+1.50RM+eML R-squared =0.4 σM =0.20 where M is S&P/TSX Comp Index and RX is the excess return of stock X. c. What is the covariance and the correlation coefficient between HD and ML?arrow_forward
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- Glencoe Algebra 1, Student Edition, 9780079039897...AlgebraISBN:9780079039897Author:CarterPublisher:McGraw Hill