Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the following are estimates for two stocks.

The following are estimates for two stocks. ...

80.2K

Verified Solution

Question

Finance

The following are estimates for two stocks.

Stock Expected Return Beta Firm-Specific Standard Deviation
A 15% 0.60 26%
B 23 1.15 38

The market index has a standard deviation of 21% and the risk-free rate is 9%.

a.

What are the standard deviations of stocks A and B? (Do not round intermediate calculations. Enter your responses as decimal numbers rounded to 2 decimal places).

Stock A
Stock B

b. Suppose that we were to construct a portfolio with proportions:

Stock A 0.35
Stock B 0.40
T-bills 0.25

Compute the expected return, standard deviation, beta, and nonsystematic standard deviation of the portfolio. (Do not round intermediate calculations. Enter your answer for Beta in numbers, not in percentage. Round your answers to 2 decimal places. Omit the "%" sign in your response.)

Standard Deviation
Expected return %
Standard deviation %
Beta
Nonsystematic standard deviation %

Answer & Explanation Solved by verified expert
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

Other questions asked by students

Q

How much ice is needed to make ice tea at a temperature of 50 C from...

Physics
Q

Name three Constitutional issues that The Supreme Court has ruled on in the 21st century. Choose...

Psychology
Q

Describe the parameters for visual analysis of case study data. How does analysis through single case...

Basic Math
Q

Gale-Shapley: Prove or dissprove the following theorem In every execution of the hospitals-propose Stable Matching algorithm, there...

Basic Math
Q

A particle P performs circular motion such that its position vector F makes an angle...

Physics
Q

7 A radio tower is supported by two wires that are 130 yards long and...

Geometry
Q

Rewrite into Radican Form 1813 315 Otx th Simpliky 3 165 4 647 3 2

Algebra
Q

5 6 pts Find all solutions in terms of integer k with initial solutions in...

Algebra
Q

4. Write down the equation for the total NMR response and...

Accounting
Q

A married couple with three children has earned income of $15,000 and adjusted gross income...

Accounting
Q

Required Information [The following Information applies to the questions displayed below.] Rles, Bax, and Thomas...

Accounting
Q

Question 7 - Sam has decided to travel the world for two years. He estimates...

Finance