Question: State Probability Return on Stock XXX Cement Return on Stock YYY Cement Return on Stock ZZZ Cement 1 25% 21 23 20 2 15% 19 25 22 3 20% 20 24 24 4 15% 22 22 26 5 Find? 23 26 28 Use the above information and to answer the following: Assume you are the investor who wants to invest in a two stock/security portfolio made from the above Stocks of your choice? a) Find the expected return of your portfolio formed from the stocks of your choice given above AND you decide the weights for the stocks in the portfolio. b) Calculate your returns from the portfolio assuming you invest $ 15000 c) Find the Covariance and correlation coefficient for your portfolio

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question:

State

Probability

Return on Stock XXX Cement

Return on Stock YYY Cement

Return on Stock ZZZ Cement

1

25%

21

23

20

2

15%

19

25

22

3

20%

20

24

24

4

15%

22

22

26

5

Find?

23

26

28

Use the above information and to answer the following:

Assume you are the investor who wants to invest in a two stock/security portfolio made from the above

Stocks of your choice?

  1. a) Find the expected return of your portfolio formed from the stocks of your choice given above AND you decide the weights for the stocks in the portfolio.
  2. b) Calculate your returns from the portfolio assuming you invest $ 15000
  3. c) Find the Covariance and correlation coefficient for your portfolio
  4. d) Justify as to on what basis did you choose these stocks and how did you decide the weights?
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