S
StarGuy121
Guest
What can I do I been stuck for many days trying to solve this so if you think you can do it then dont hesitate to attempt any part of this.
So there is a two stock portfolio, stock X and stock Y.
Stock X has a portfolio weight of 0.40, expected return 18%, and standard deviation 35%.
Stock Y has a portfolio weight of 0.60, expected return 11%, and standard deviation 35%.
A) What is the portfolio's expected return (I think I have the answer for this which is 13.80%)
B) Suppose Stocks X and Y are perfectly, positivley correlated (r = 1). What is the portfolio's standard deviation of returns.
C) If you added randomly selected stocks to the portfolio, the portfolio's standard deviation would decrease, increase, or stay the same?
D) If a portfolio has no firm-specific risk remianing, which of the following is the best estimate of the standard deviation of returns?: 35%, 70%, 0%, 20%, 50%.
E) The tradeoff between risk and return is a cornerstone concept in finance. If a security offers a higher expected return, it must have higher risk. Look at the two stocks described in this problem. They have the same risk, but one has a higher expected return. Does this example contradict the tradeoff between risk and return?
If no one has any idea how to do any of these then I will complain that the difficulty of this is too high
So there is a two stock portfolio, stock X and stock Y.
Stock X has a portfolio weight of 0.40, expected return 18%, and standard deviation 35%.
Stock Y has a portfolio weight of 0.60, expected return 11%, and standard deviation 35%.
A) What is the portfolio's expected return (I think I have the answer for this which is 13.80%)
B) Suppose Stocks X and Y are perfectly, positivley correlated (r = 1). What is the portfolio's standard deviation of returns.
C) If you added randomly selected stocks to the portfolio, the portfolio's standard deviation would decrease, increase, or stay the same?
D) If a portfolio has no firm-specific risk remianing, which of the following is the best estimate of the standard deviation of returns?: 35%, 70%, 0%, 20%, 50%.
E) The tradeoff between risk and return is a cornerstone concept in finance. If a security offers a higher expected return, it must have higher risk. Look at the two stocks described in this problem. They have the same risk, but one has a higher expected return. Does this example contradict the tradeoff between risk and return?
If no one has any idea how to do any of these then I will complain that the difficulty of this is too high