Suppose General Motors stock has an expected return of 19% and a volatility of 40%, and Molson-Coors Brewing has an expected return of 11% and a volatility of 30%. If the two stocks are uncorrelated, a. What is the expected return and volatility of a portfolio consisting of 72% General Motors stock and 28% of Molson-Coors Brewing stock? b. Given your answer to (a), is investing all of your money in Molson-Coors stock an efficient portfolio of these two stocks? c. Is investing all of your money in General Motors an efficient portfolio of these two stocks?
Suppose General Motors stock has an expected return of 19% and a volatility of 40%, and Molson-Coors Brewing has an expected return of 11% and a volatility of 30%. If the two stocks are uncorrelated, a. What is the expected return and volatility of a portfolio consisting of 72% General Motors stock and 28% of Molson-Coors Brewing stock? b. Given your answer to (a), is investing all of your money in Molson-Coors stock an efficient portfolio of these two stocks? c. Is investing all of your money in General Motors an efficient portfolio of these two stocks?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Suppose General Motors stock has an expected return of
19%
and a volatility of
40%,
and Molson-Coors Brewing has an expected return of
11%
and a volatility of
30%.
If the two stocks are uncorrelated,a. What is the expected return and volatility of a portfolio consisting of
72%
General Motors stock and
28%
of Molson-Coors Brewing stock?b. Given your answer to
(a),
is investing all of your money in Molson-Coors stock an efficient portfolio of these two stocks?c. Is investing all of your money in General Motors an efficient portfolio of these two stocks?
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