Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. pepsi’s mean return over the last 5 years is 19%

Pepsi’s mean return over the last 5 years is 19% while McDonald’s is 14%. Their respective...

90.2K

Verified Solution

Question

Finance

  1. Pepsi’s mean return over the last 5 years is 19% whileMcDonald’s is 14%. Their respective standard deviations are 21% and18%. The two stocks correlation coefficient is -.20.

  1. Calculate the portfolio mean return for the minimum varianceportfolio.
  2. Calculate the portfolio risk for the minimum varianceportfolio.
  3. Discuss the benefits of diversification for Pepsi andMcDonald’s.

Answer & Explanation Solved by verified expert
3.8 Ratings (364 Votes)
aThe formula to calculate Mean expectedreturn of minimum variance porfolio is1whereErPMean return of Pepsiwpweight of pepsiErMMean return of McDonaldswMweight of    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Pepsi’s mean return over the last 5 years is 19% whileMcDonald’s is 14%. Their respective standard deviations are 21% and18%. The two stocks correlation coefficient is -.20.Calculate the portfolio mean return for the minimum varianceportfolio.Calculate the portfolio risk for the minimum varianceportfolio.Discuss the benefits of diversification for Pepsi andMcDonald’s.

Other questions asked by students

Q

The boxplot below shows salaries for Actuaries and CPAs CPA Actuary H 20 30 40...

Statistics
Q

1/Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the...

Accounting
Q

25 Disulfide bridges can form in proteins A between any two methionines or cysteines B...

Biology
Q

Cell cycle checkpoints that check for the quality of the DNA would most likely be...

Biology
Q

You can afford a $1100 per month mortgage payment. You've found a 30 year loan...

Basic Math
Q

1 The forward difference formula can be expressed as h xo xo h xo ro...

Basic Math
Q

E15.22 (LO 7) AP The adjusted trial balance for Ray Corporation at July 31, 2021,...

Accounting
Q

FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were...

Accounting
Q

On January 1, 2024, a company owed a bank $27 million under a 12% note...

Accounting
Q

18) Compute the profit margin (rounded to nearest percent) for Titania Corporation's Investment center using...

Accounting
Q

There come for year the year of person for the company was 52000 and dividends...

Accounting
Q

Wilm Schmidt, the owner of Wilms Window Washing Services, had difficulty getting the debits to...

Accounting