Suppose you created a two-stock portfolio by investing $50,000 in High Tech and $50.000 in Collections. 1. Calculate the expected return (f.), the standard deviation (o.), the coefficient of variation (CV,), and the Sharpe ratio for this portfolio, and fill in the appropriate blanks in the table. 2. How dos the riskiness of this two-stock portfolio compare with the riskiness of the individual stocks if they were held in isolation?
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- Jack has $100,000 invested in a 2-stock portfolio. $35,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? show work in in excel to better understand How is Beta measured and what does it tell us about the risk of the asset?New Question: Is it possible to Clarify the following Bartleby Expert Answer, with any Signs (/, *, +,-) and/or Positions (^, XY, Xy) that may be helpful? Thank you! (Original Question is also provided). Original Question: 1. Assume that net investment at time t is given by I (t) = 12t¹/², (b) (10) When the initial capital stock is 25, i.e., K (0) = 25, how can we compute the capital stock at time t?You are currently considering in investing Rs.1.2 million in equity investment portfolio. Your analysis reveals that equity stock of the following three companies are suitable options for your investment. Company P R Expected retum (%) Standard deviation (%) Correlation coefficient; 25 22 20 30 26 24 PQ QR -0.5 +0.4 PR +0.6 You are required to; (a) Calculate the expected returm of the portfolio if Rs.1.2 million is equally invested in the stocks of all three companies.
- JaiLai Cos. stock has a beta of 0.8, the current risk-free rate is 5.8 percent, and the expected return on the market is 14 percent What is JaiLai's cost of equity? (Round your answer to 2 declmal places.) Cost of equity < Prev 3 of 10 Score a re to search 近。Cost ofequity: SML. Stan is expanding his business and will sell common stock for the needed funds. If the current risk- free rate is 5.5% and the expected market return is 11.8%, what is the cost of equity for Stan if the beta of the stock is: a. 0.61? b. 0.93?An investor holds a portfolio of stocks and is considering investing in the DBB Company. The firm’s prospects look neutral, and you estimate the following probability distribution of possible returns: Conditions P Returns on DBB Returns on DVI Recession 0.12 -33% -12% Below Average 0.15 -18% 7% Average 0.46 12% 11% Above Average 0.15 25% 23% Boom 0.12 37% 25% a) How much isthe expected return for DBB? b) How much isthe coefficient of variation for DBB? c) Now let’s say you want to add another asset, DVI, to your portfolio. You sell 35% of DBB to purchase DVI. How much is your expected return for this portfolio? d) How much isthe coefficient of variation for the new portfolio?
- Diddy Corp. stock has a beta of 1.4, the current risk-free rate is 4 percent, and the expected return on the market is 14.00 percent. What is Diddy's cost of equity? (Round your answer to 2 declmal places.) Cost of equity < Prev Graw Type here to search 立。 DELLThe rate of return on the market stock index is 13 percent. The rate of return on a risk-freebank account is 1%. The B (beta) of stock XYZ is 1.5. Use the data to answer the questionsbelow.a. What is the market risk premium? Show your work.b. What is the cost of equity for XYZ? Show your work.c. What is the stock XYZ risk premium? Show your work.d. Draw the graph of the Security Market Line and show the stock of XYZ on the graph.The end-of-year dividend on stock ABC is expected to be $0.8. The growth rate of dividend isexpected to be 5 percent for ever. The current price of the ABC stock is $10. Use the data toanswer the questions below.e. What is the cost of equity for stock ABC? Show your work.f. Suppose stock KLM has the same end-of-year dividend, dividend growth rate andprice as stock ABC, but the risk of KLM stock is much greater than of the ABC stock.What is your estimate of the cost of equity of stock KLM using the method at part e?Do you agree with the valuation of the cost of…An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?
- (c) Consider information given in the table below and answers the question asked thereafter: iv. Calculate covariance and coefficient of correlation between the returns of the stocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfolio comprising of $35,000 invested in stock A and remaining amount in stock B. Calculate risk and return of your portfolio. (d) Firm A reports a Profit Margin of 6.5% and a Total Asset Turnover Ratio of 3.25. Their total asset level is $8,500,000. Assume there are 700,000 shares outstanding and the PE ratio is 11. Also, assume the Return on Equity is 16%. Based on this, calculate the MV/BV ratio.c. An investor wants to implement a returns-based momentum strategy. Using the method in the Study Guide, what money position should be held in each of the four stocks given below if the total long position is to be $1,000? Explain your reasoning. Security Period 1 Period 2 A 30 40 50 70 60 65 10 12 BCDA portfolio worth $5,500 is invested in Stocks A and B plus a risk-free asset. A total of $2,500 is invested in Stock A with a beta of 1.27. Stock B has a beta of .89. How much needs to be invested in Stock B if the goal is to create a portfolio that will mimic the entire market? Multiple Choice $1,482.08 $3,408.15 −$894.20 $2,266.67 $2,612.36