90.2K

Verified Solution

Link Copied!

od 90% in Fim B's common stock and the correlation coefficient between the two stocks is 0.20, then the expected rate of return in the portfolio is 1% (Round 35.) - X od 10% Data table um in the portfolio is % (Round os.) od 90% oturn in the portfolio is %. (Rour Expected Returns Firm A's common stock 0.15 Firm B's common stock 0.11 Correlation coefficient 0.20 (Click on the icon in order to copy its contents into a spreadsheet.) Standard Deviation 0.11 0.05 es.) in the portfolio is % (Round - 10% in F ces.) ky asset Print Done king a higher proportion of the portfo stocks ar also be lowered by investing a higher if the stochoroponon stocks are negativnly correlated rather than positively correlated. Regardless of correlation, risk can also be lowered by investing a higher proportion of the portfol Computing the standard deviation for a portfolio of two risky investments) Mary Outlet recently graduated from college and is evaluating an investment in two companies common stock has colected a following Mary decides to invest 10 percent of her money in Fim As common stock and 90 percent in Finn B's common to what is the expected rate of return and the standue deviation of tre portio retum? b. Mary decided to invest o percent of her money in Form A's common stock and 10 percord In Fiom by common stock what is the expected rate of return and the standard deviation of the portfolio retur? Recompute your responses to both questions and b, where the corelation between the two tome stock phure-020. d. Summarize what your analysis tells you about portfolio risk when combining risky assets in a portfolio Mary decides to invest 10% of her money in Form As common stock and 90% in Fim Eis common stock and certation coeficient between the two locks 0.20. Then the sected rate of munn tio portfolio - The standard deviation in the portfolio in % (Round to two decimal places) Mary decides to invest 80% of her money in FemA's common stock and 10% in Firm By common rock and the correlation coeficient between the two sto 0, then the expected to drawn in the portfolio The standard deviation in the portfolio - (Round to two decimal places) c. Mary decides to invest 10% of her money in Fm Asconeson stock and 90% in my common stock and the condition coeficient between the two stocks - 020, then the expected rate of return in se pontos The standard deviation in the portfolio is(% Round to bwo decimal places) Many decides to invest 90% of her money in Fim A's common stock and 10% in Firm Bis common stock and the correlation coeficient beteen the two stocks 020, then the expected rate of or in the portfolio is The standard deviation of the portfolio is % (Round to two decimal places) . Whut down your analysis tell you about portfolio riak when combining risky assets in a portolo? (Seine the best choice below) OA. You can maintain the same return in a portfolio but lower risk the stocks are positively correlated rather than negatively cold. Regardless of correlations can also be lowered by Westing a higher proportion however will increase retum OB. You can maintain the same rum in a portfolio but lower risk more if the stocks are positively correlated rather than negative correlated comition of the two stocks is the same, nak can also be lowered by Invest standard deviation, this however will reduceretur ng your minne om in a portfolio but lower risk of the stocks are regatively correlated rather than positively comiated Regardless of comition, nisk can also be lowered by investing a higher proportion

Answer & Explanation Solved by verified expert

See Answer