Suppose you have a portfolio consisting of two assets, A and B. Stock A has an expected return of 14% and a standard deviation of 31%. Stock B has an expected return of 10% and a standard deviation of 15%. Stocks A and B have a correlation of 0.98. Assuming you invest $7,000 in stock A and $3,000 in stock B, what is the standard deviation of your portfolio?     35.1%     19.4%     26.1%     14.1%

Problem 3: You have access to two investment opportunities. Mutual Fund A, which promises 20% expected return with a variance of 0.36, and Mutual Fund B, which promises 15% expected return with a variance 0f 0.12. The covariance between the two is 0.084.  1. Suppose that you seek to construct a portfolio with an expected return equal to 18%. What proportions of your wealth should you invest in A and B? What is the standard deviation of such portfolio? 2. In addition to the funds A and B in the previous question, now you decide to include fund C to your portfolio. Its expected return is 10, its variance 0.0625, its correlation with A is 0.1050 and its correlation with B is 0.07. You want to achieve an expected return of 16% on your portfolio, with the minimum possible risk (measured by the standard deviation). Derive analytically (that is, without the help of solver, but trough calculus) the weights of such desired portfolio, and its standard deviation.

An Equity has a beta of 0.9 and an expected return of 9%. A risk free asset currently earns 2%. What is the expected return on a portfolio that is equally invested in two assets?  If a portfolio of the two assets has an expected return of 6%, what is its beta  If a portfolio of the two assets has a beta of 1.5, what is its beta  If a portfolio of the two assets has a beta of 1.5, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

An investor has a portfolio of two securities, a stock with a beta of 1.24 and a risk-free asset. The stock has an expected return of 13.68% and the risk-free asset has an expected return of 2.80%. The portfolio beta is 0.65. What rate of return should the investor expect to earn on her portfolio?   Group of answer choices 8.50% 9.16% 9.33% 9.41%

You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5 stocks are as follows: 0.8, -1.3, 0.95, 1.2, and 1.4. The risk-free return is 3% and the market return is 7%. a. Compute the beta of the portfolio. b. Compute the required return of the portfolio.

Examples Given You own a portfolio of two stocks, A and B. Stock A is valued at $10,500 and has an expected return of 11 percent. Stock B has an expected return of 9 percent. What is the expected return on the portfolio if the portfolio value is $15,500?

Stock X has a standard deviation of return of 25 percent. Stock Y has a standard deviation of return of 5 percent. The correlation coefficient between the two stocks is 0.5. If you invest 60 percent of your funds in Stock X and 40 percent in Stock Y, what is the standard deviation of your portfolio? Multiple Choice O 14.2 percent 24.9 percent 16.1 percent 18.7 percent

You manage a risky portfolio with an expected rate of return of 12% and a standard deviation of 36%. The T-bill rate is 3%. Stock A 27% Stock B 35% Stock C 38% Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 10%. Required: What is the proportion y? What are your client’s investment proportions in your three stocks and the T-bill fund? What is the standard deviation of the rate of return on your client’s portfolio?

2. Consider two assets, S and B. The expected return on S is 12.2% while the expected return on B is 5.8 % . The standard deviation of Asset S returns is 20 %, while the standard deviation of Asset B returns is 10%. The correlation between Asset S and Asset B returns is 0.05. (a) What is the expected return on a portfolio with 20% of invested funds in S and 80% of invested funds in B? (b) What is the standard deviation of returns for a portfolio with 20% of invested funds in S and 80% of invested funds in B? (c) Compare your answers obtained in part (b) to the expected return and standard deviation of a portfolio will all funds invested in B, and summarize the principle demonstrated by the comparison. (d) Assume that the correlation of 0.05 was based on

a. Using the data provided in problem 3, determine the return and risk for a portfolio made up of the following three stocks if you want to distribute your investment as follows: 20% in ADRE; 65% in MSFT and 15% in GOOG.b. How would the portfolio be affected if you distributed your investment in the following way: 30% in ADRE; 25% on MSFT and 45% on GOOG?c. Which of the two portfolios would a risk seeking investor prefer and why?