1

Assume the standard deviation of stock A is 10% and the standard deviation of stock B...

Question

Assume the standard deviation of stock A is 10% and the standard deviation of stock B...

Assume the standard deviation of stock A is 10% and the standard deviation of stock B is 50%. You have bought $10,000 worth of stock A and $30,000 worth of stock B. If the correlation coefficient between the two stocks is -0.20 (negative!), what is the standard deviation of this two-stock portfolio?

a) 34.8%

b) 35.8%

c) 36.3%

d) 37.1%

e) 37.5%

Answers

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

C D E Standard deviation Stock A Stock B Investment $10,000 $30,000 $40,000 Weight 0.25 0.75 10% 50% Correlation (A&B) -0.20

Cell reference -

120 А в I L Investment Weight Standard deviation | Stock A Stock B 10000 30000 =SUM(C3:04) =C3/$C$5 =C4/$C$ 5 0.1 .5 0 Correl

Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.


Similar Solved Questions

1 answers
Neptune Accounting Services expects its accountants to work for 26,000 direct labor hours per year. The...
Neptune Accounting Services expects its accountants to work for 26,000 direct labor hours per year. The company's estimated total indirect costs are $224,000. The direct labor rate is $70 per hour. The company uses direct labor hours as the allocation base for indirect costs. If Neptune performs...
1 answers
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared...
Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours w...
1 answers
Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these...
Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data concerning these two product lines appear below: Pathfinder Xtreme $ 115.00 $ 63.90 $ 12.00 $ 85.00 Selling price per unit Direct materials per unit Direct labor per unit 51.00 10.00 Direct labor-hours per...
1 answers
Can you complete these problems? They go hand-in-hand with each other! (6-7B and 6-8B) Also, the...
Can you complete these problems? They go hand-in-hand with each other! (6-7B and 6-8B) Also, the picture of the excel file is how it needs to be layed out. Thanks! LO 6-2 Exercise 6-7B Special order decision Wilcox Automotive Company manufactures an engine designed for motorcycles and markets th...
1 answers
6. Suppose that X, , ,x, are i.id. randon variables and let X-n Σηί Xi. (a)...
6. Suppose that X, , ,x, are i.id. randon variables and let X-n Σηί Xi. (a) Show that the sum of residuals always equal to zero, .e., show that (b) Show that (c) Please answer the following questions and provide a brief explanation to your answers What is the degree of freedom of (X1,...
1 answers
13.05 Currency Exchange Rates Custom Shutters, Inc., manufactures plantation shutters according to customer order. The company...
13.05 Currency Exchange Rates Custom Shutters, Inc., manufactures plantation shutters according to customer order. The company has a reputation for producing excellent quality shutters that fit virtually any size or shape of window. Sales are made in all 50 states. On July 1, Custom Shutters receive...
1 answers
Use the Maxwell relations to express the following derivatives in terms of the expansion coefficient a,...
Use the Maxwell relations to express the following derivatives in terms of the expansion coefficient a, the isothermal compressibility KT, and heat capacities av а. as as b. дV...
1 answers
Problem 85A Accounts receivable transactions and bad debt adjustments 01, 2, 3 CHECK AGURES: 2. Bad...
Problem 85A Accounts receivable transactions and bad debt adjustments 01, 2, 3 CHECK AGURES: 2. Bad Debt Expense = $20,460,5. Bad Debt Expense = $7.200 Swiss Supplies showed the following selected adjusted balances at its December 31, 2019. yearend: Accounts Receivable Dec. 31/19 Balance Allowance f...
1 answers
The following is a summary of the service-support and operations departmnets for Clear Company: ACCT Purchasing...
The following is a summary of the service-support and operations departmnets for Clear Company: ACCT Purchasing Assembly Packaging Total Deprtmental Costs $ 6,200 $3,000 $ 25,000 $ 30,000 $ 64,200 The total costs of the support deparments (ACCT and PUR) are allocated to the production departments (A...
1 answers
Categorical data can be numeric or non-numeric. True O False
Categorical data can be numeric or non-numeric. True O False...
1 answers
Part II - Job Costing Use the information below to answer the following questions: County Lawn...
Part II - Job Costing Use the information below to answer the following questions: County Lawn and Garden Company is a manufacture of lawn and garden equipment: Budgeted and Actual for 2017 Budgeted variable factory overhead (Budgeted fixed factory overhead (Actual variable factory overhead (Actual ...
1 answers
CALCULATOR FULL SCREEN PRINTER VERSION BACH Exercise 19-03 Barnes Company reports the following operating results for...
CALCULATOR FULL SCREEN PRINTER VERSION BACH Exercise 19-03 Barnes Company reports the following operating results for the month of August: sales $300,000 (units 5,000); variable costs $217,000; and fixed costs $71,800. Management is considering the following independent courses of action to increase...
1 answers
MVC hold pre exercise - 19.6 kg MVC hold post exercise - 13. 2 kg Why...
MVC hold pre exercise - 19.6 kg MVC hold post exercise - 13. 2 kg Why do MVC (maximal voluntary contraction) Holds cause fatigue? Which muscles are involved in this activity? *MVC hold - arms at 90-degree angle pressing machine for 30 seconds...
1 answers
Let f=x3 +x2 + x + 1 in Z2 [x]. Write f as a product of...
Let f=x3 +x2 + x + 1 in Z2 [x]. Write f as a product of irreducible polynomials in Z2 ....
1 answers
(a) A negative-level sensitive (negative triggered) D latch circuit can be designed using a circuit as...
(a) A negative-level sensitive (negative triggered) D latch circuit can be designed using a circuit as shown in Figure 3 CLK DH CLK ola CLK Figure 3 Obtain the equation for the output of the circuit, Q. Analyse the circuit and determine when the circuit is in 'transparent form and "opaque...
1 answers
Decide whether each chemical reaction in the table below is an oxidation-reduction ("redox") reaction. If the...
Decide whether each chemical reaction in the table below is an oxidation-reduction ("redox") reaction. If the reaction is a redox reaction, write down the formula of the reducing agent and the formula of the oxidizing agent. redox reaction? yes no reducing Na,CO,C.) + H,PO, (ag) - N,HPO,() +...
1 answers
Nash Corporation had net sales of $2,420,000 and interest revenue of $40,900 during 2017. Expenses for...
Nash Corporation had net sales of $2,420,000 and interest revenue of $40,900 during 2017. Expenses for 2017 were cost of goods sold $1,453,900, administrative expenses $221,800, selling expenses $296,100, and interest expense $51,900. Nash’s tax rate is 30%. The corporation had 105,200 shares ...
1 answers
Hello! I am working on this genetics problem and was wondering if these two answers would...
Hello! I am working on this genetics problem and was wondering if these two answers would make sense. Thank you for the help! Question 1 (1 point) Saved Why can bacteria have poly-cistronic genes? Because they need multiple cistron organelles so they segregate evenly during cell division. Becaus...

-- 0.017135--