Connect 1-Semester Access Card for Essentials of Investments
Connect 1-Semester Access Card for Essentials of Investments
10th Edition
ISBN: 9781259354977
Author: Zvi Bodie, Alan Marcus, Alex Kane
Publisher: McGraw-Hill Education
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Chapter 6, Problem 13PS
Summary Introduction

(a)

Adequate information:

Expected rate of return on stock is10%.

Standard deviation on stock is20%.

Expected rate of return on gold is 5%.

Standard deviation on gold is 25%.

Introduction:

Expected rate of return is calculated as a percentage return that is expected to be earned by an investor over a period of time. The standard deviation is commonly used to measure the dispersionof data from its average.

Summary Introduction

(b)

Adequate information:

Correlation coefficient between stock and gold is 1

Expected rate of return on stock is 10%.

Standard deviation on stock is 20%.

Expected rate of return on gold is 5%.

Standard deviation on gold is 25%.

Introduction:

Expected rate of return is calculated as a percentage return that is expected to be earned by an investor over a period of time. While the standard deviation is the measure of dispersion of a set of data from its mean.

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Chapter 8 Risk and Return; Author: Michael Nugent;https://www.youtube.com/watch?v=7n0ciQ54VAI;License: Standard Youtube License