Suppose Wesley Publishing's stock has a volatility of 70%, while Addison Printing's stock has a volatility of 20%. If the correlation between these stocks is 25%, what is the volatility of the following portfolios of Addison and Wesley: a. 100% Addison b. 75% Addison and 25% Wesley c. 50% Addison and 50% Wesley a. The volatility of a portfolio of 100% Addison stock is %. (Round to two decimal places.) b. The volatility of a portfolio of 75% Addison and 25% Wesley is %. (Round o two decimal places.) c. The volatility of a portfolio of 50% Addison and 50% Wesley is %. (Round to two decimal places.)

Suppose Wesley Publishing's stock has a volatility of 70%, while Addison Printing's stock has a volatility of 20%. If the correlation between these stocks is 25%, what is the volatility of the following portfolios of Addison and Wesley: a. 100% Addison b. 75% Addison and 25% Wesley c. 50% Addison and 50% Wesley a. The volatility of a portfolio of 100% Addison stock is %. (Round to two decimal places.) b. The volatility of a portfolio of 75% Addison and 25% Wesley is %. (Round o two decimal places.) c. The volatility of a portfolio of 50% Addison and 50% Wesley is %. (Round to two decimal places.)

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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Suppose Wesley Publishing's stock has a volatility of 60%, while Addison Printing's stock has a volatility of 20%. If the correlation between these stocks is 20%, what is the volatility of the following portfolios of Addison and Wesley: a. 100% Addison b. 75% Addison and 25% Wesley c. 50% Addison and 50% Wesley
Suppose Wesley Publishing's stock has a volatility of 70%, while Addison Printing's stock has a volatility of 30%. If the correlation between these stocks is 50%, what is the volatility of the following portfolios of Addison and Wesley: a. 100% Addison b. 75% Addison and 25% Wesley c. 50% Addison and 50% Wesley
Suppose that the average stock has a volatility of 49%, and that the correlation between pairs of stocks is 19%. Estimate the volatility of an equally weighted portfolio with: a. 1 stock b. 30 stocks c. 1,000 stocks a. The volatility of an equally weighted portfolio with 1 stock is 49 %. (Round to two decimal places.) b. The volatility of an equally weighted portfolio with 30 stocks is%. (Round to two decimal places.)
Suppose that the average stock has a volatility of 53%, and that the correlation between pairs of stocks is 18%. Estimate the volatility of an equally weighted portfolio with: a. 1 stock b. 30 stocks c. 1,000 stocks
Using the data from the table E, what is the volatility of an equally weighted portfolio of Alaska Air (ALK), HP Inc. (HPQ), and General Mills (GIS) stock? Hint: Make sure to round all intermediate calculations to at least four decimal places. The volatility of an equally weighted portfolio of the three stocks is %. (Round to two decimal places.)
Suppose General Motors stock has an expected return of 18% and a volatility of 39%, and Molson-Coors Brewing has an expected return of 14% and a volatility of 30%. If the two stocks are uncorrelated, a. What is the expected return and volatility of a portfolio consisting of 74% General Motors stock and 26% 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?
Arbor Systems and Gencore stocks both have a volatility of 44%. Compute the volatility of a portfolio with 50% invested in each stock if the correlation between the stocks is (a) +1.00, (b) 0.50, (c) 0.00, (d) - 0.50, and (e) - 1.00. In which of the cases is the volatility lower than that of the original stocks? If the correlation is +1.00, the volatility of the portfolio is%. (Round to two decimal place.)
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?
Arbor Systems and Gencore stocks both have a volatility of 37%. Compute the volatility of a portfolio with 50% invested in each stock if the correlation between the stocks is (a) + 1.00, (b) 0.50, (c) 0.00, (d) – 0.50, and (e) - 1.00. In which of the cases is the volatility lower than that of the original stocks? If the correlation is + 1.00, the volatility of the portfolio is %. (Round to one decimal place.) If the correlation is 0.50, the volatility of the portfolio is %. (Round to one decimal place.) If the correlation is 0.00, the volatility of the portfolio is %. (Round to one decimal place.) If the correlation is - 0.50, the volatility of the portfolio is %. (Round to one decimal place.) If the correlation is - 1.00, the volatility of the portfolio is %. (Round to one decimal place.) In which of the cases is the volatility lower than that of the original stocks? (Select the best choice below.) A. In all of the cases. B. In cases (b), (c), (d) and (e). C. In none of the cases. O…
Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.2%. Johnson & Johnson Walgreen Company E [R] 7.2% 9.3% SD [R] 16.8% 20.4% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is ☐ %. (Round to one decimal place.) b. The volatility (standard deviation). The volatility of the portfolio is %. (Round to one decimal place.)
Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.4%. Johnson & Johnson Walgreen Company E [R] 6.5% 10.7% SD [R] 15.5% 19.9% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is %. (Round to one decimal place.)
Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.7%. Johnson & Johnson Walgreen Company E [R] 6.1% 10.8% SD [R] 16.5% 19.1% For a portfolio that is equally invested in Johnson & Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is%. (Round to one decimal place.) b. The volatility (standard deviation). The volatility of the portfolio is%. (Round to one decimal place.)

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