Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. part 1: assume that the average variance of return

Part 1: Assume that the average variance of return for an individual security is 50 and...

70.2K

Verified Solution

Question

Finance

Part 1: Assume that the average variance of return for anindividual security is 50 and that the average covariance is 10.What is the expected variance of an equally weighted portfolio of5,10,20,50, and 100 securities?

Part 2: In part 1, how many securities need to be held beforethe risk of a portfolio is only 10% more than minimum?

Answer & Explanation Solved by verified expert
4.1 Ratings (766 Votes)
Part 1 expected variance of an equally weighted portfolio 1no of securitiesaverage variance no of securities 1no of securitiesaverage covariance expected variance of an equally weighted portfolio of 5 securities    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Advance Math
1.2K views

Combined, there are 207 ?Asians, Africans,? Europeans, and Americans in a village. The number of Asians...

Finance
1.2K views

Modern (MPT) and Post-Modern (PMPT) Portfolio Theory   Harry Markowitz (1952/1957/1959) developed Modern P ortfolio Theory (MPT). Graph the...

Economics
1.2K views

What are the ‘Lessons’ of the Specific Factor Model? Demonstrate this lesson using formal modeling (either...

Physics
1.2K views

A positive point charge q is projected along x aixs Electric field is directed along...

Physics
1.2K views

30 What is the applied centrifugal field at a point equivalent to 5 cm from...

Physics
1.2K views

5 A ring has a total mass M but non uniformly distributed over its circumference...

Statistics
1.2K views

The price of a home is 270 000 The bank requires a 5 down payment...

Accounting
1.2K views

Snug-As-A-Bug Blankets has the following inventory data: July 1 Beginning inventory 30 units at $60...

Accounting
1.2K views

Match the items Examination of financial data...

Accounting
1.2K views

The interest charged on a $350,000 note payable, at the rate of 6%, for a...

Accounting
1.2K views

A company uses the periodic inventory method. An error in the physical count of inventory...

Finance
1.2K views

a. The NPV of preject A is 5 (Round to the nearest cent) According to...