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- Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% Calculate covariance and coefficient of correlation between the returns of thestocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfoliocomprising of $45,000 invested in stock A and remaining amount in stock B.Calculate risk and return of your portfolio.What is Stock X's geometric returns if it has the following returns? Year 1 8% Year 2 - 5% Year 3 10% Year 4 - 6% Year 5 15% a. 4.1%. b. 5.2% c. 6.8% d. 8.5%Using the data in the following table, and the fact that the correlation of A and B is 0.62, calculate the volatility (standard deviation) of a portfolio that is 80% invested in stock A and 20% invested in stock B. (Click on the following icon in order to copy its contents into a spreadsheet.) Year 2008 2009 2010 2011 2012 2013 Realized Returns Stock A - 8% 17% 5% - 8% 4% 7% Stock B 17% 39% 11% - 1% - 5% 17% The standard deviation of the portfolio is %. (Round to two decimal places.)
- What is the standard deviation of stock A if it has the following probabilities and rate of returns. Probability Return 0.3 -5% 0.4 14% 0.3 11% a. 9.11% b. 9.40% c. 8.62% d. 8.21%Characteristic Line and Security Market Line You are given the following set of data: Historical Rates of Return Year NYSE Stock X 1 -26.5% -11.0% 2 37.2 25.0 3 23.8 13.5 4 -7.2 2.0 5 6.6 11.1 20.5 18.5 7 30.6 19.0 a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X's beta coefficient. Do not round intermediate calculations. Round your answer to two decimal places. b. Determine the arithmetic average rates of return for Stock X and the NYSE over the period given. Calculate the standard deviations of returns for both Stock X and the NYSE. Do not round intermediate calculations. Round your answers to two decimal places. Stock X NYSE Average return, FAvg % % Standard deviation, ơ %You are given the following information concerning a stock and the market Year 2017 2018 2019 2020 2021 2022 Returns Market 18% 11 12 -14 37 15 Correlation Beta a. Calculate the average return and standard deviation for the market and the stock. Note: Use Excel to complete the problem. Enter your answers as a percent rounded to 2 decimal places. Average return Standard deviation Stock 34% 27 3 -21 16 22 Market % Stock % % b. Calculate the correlation between the stock and the market, as well as the stock's beta. Note: Use Excel to complete the problem. Round your correlation answer to 2 decimal places and beta answer to 4 decimal places.
- financial advisor evaluates four stocks for inclusion in an investor's portfolio. A orrelation matrix showing each stock's correlation with the other stocks is shown below Stock ALK CMN BTY DLE ALK 0.40 0.58 1.00 -0.25 BTY 0.40 1.00 0.16 -0.04 CMN -.25 .16 1.00 .37 DLE .58 .04 .37 1.00 f the goal is to reduce the investor's overall portfolio risk, which two stocks should the advisor recommend? a. ALK and DLE b. ALK and CMN c. BTY and DLE BTY and CMUsing the data in the following table, and the fact that the correlation of A and B is 0.06, calculate the volatility (standard deviation) of a portfolio that is 70% invested in stock A and 30% invested in stock B. The return of stock A is ☐ %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Realized Returns Year Stock A Stock B 2017 15% 24% 2018 12% 22% 2019 9% 10% 2020 -4% -4% 2021 4% -3% 2022 11% 22%Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .092, E(RB) = 152, đA = .362, and Og = .622. %3D Calculate the expected return of a portfolio that is composed of 37 percent A and 63 percent B when the correlation between the returns on A and B is .52. (Do not a-1. round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio that is composed of 37 percent A and 63 percent B when the correlation coefficient between the returns on A and B is .52. а-2. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the standard deviation of a portfolio with the same portfolio weights as in h part (a) when the correlation coefficient between the returns on A and B is -.52. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a-1.…
- Suppose you are given the following information about 2 stocks, what is the return standard deviation of a portfolio weighted 55% in stock A and 45% in stock B? E(RA)=16% E(RB)=8% σA=22% σB=12% σA,B=−0.003696 Enter rate in decimal form, rounded to 4th digit, as in "0.1234"Calculate the standard deviation of a portfolio with 0.24 invested in Asset A, 0.33 invested in Asset B, and the rest invested in Asset C. Express your answer as a decimal with four digits after the decimal point (e.g., 0.1234, not 12,34%). Std Dev(A) = 0.43, Std Devirg) = 0.67. Std Dev(rc)=0.53 Correlation(A) =-0.24, Correlation(Arc)-0.32, Correlationirere)=0.09 Type your answer.....Using the data in the following table,, estimate the: a. Average return and volatility for each stock. b. Covariance between the stocks. c. Correlation between these two stocks. a. Estimate the average return and volatility for each stock. The average return of stock A is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 2010 2011 20% 2013 - 1% - 13% Stock A Stock B 20% 12% - 9% Print 2012 8% 9% C Done 2014 4% - 9% 2015 11% 27% - X