1. You are given the following sample annual data about the prices of Alibaba and Google stocks: a. b. C. Time End-2018 End-2019 End-2020 End-2021 End-2022 Alibaba Stocks stocks. $148.50 $157.34 $165.75 $177.00 $190.24 Google Stocks $1,564.23 $1,723.26 $1,700.54 $1,894,23 $1,900.23 Determine the sample covariance of the returns of Alibaba and Google stocks. , Compute for the sample standard deviation of the returns of Alibaba and Google ) Determine the sample correlation between the returns of Alibaba and Google stocks.

1. You are given the following sample annual data about the prices of Alibaba and Google stocks: a. b. C. Time End-2018 End-2019 End-2020 End-2021 End-2022 Alibaba Stocks stocks. $148.50 $157.34 $165.75 $177.00 $190.24 Google Stocks $1,564.23 $1,723.26 $1,700.54 $1,894,23 $1,900.23 Determine the sample covariance of the returns of Alibaba and Google stocks. , Compute for the sample standard deviation of the returns of Alibaba and Google ) Determine the sample correlation between the returns of Alibaba and Google stocks.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter31: Capital Markets

Section: Chapter Questions

Problem 4E

See similar textbooks

Similar questions

Suppose that you are asked to forecast future stock prices for Tesla, so you proceed tocollect all available information. The day you announce your forecast, Toyota announce abrand-new plan to merge and reshape the structure of the electric carts industry. Wouldyour forecast still be considered optimal? Discuss.
How would you describe the relationship between a risky investment and the return on that investment (think stocks or retirement accounts)? a casual or limited relationship there is no relationship between the level of risk and the return you get on your investment a direct or positively correlated relationship an inverse or negatively correlated relationship
D & R A1 11 - 3 Question 11. Hedging with Stock Index Futures You manage a portfolio that is currently all invested in equities in companies in five major Canadian industries. The market value involved and beta for each industry are shown in the table below. Industry Market Value Beta Oil and Gas $1,100,000 1.2 Technology 900,000 1.5 Utilities 1,500,000 0.8 Financial 1,000,000 1.3 Pharmaceutical 800,000 1.1 You believe that the Canadian equity market is on the verge of a big but short-lived downturn. You would move your portfolio temporarily into T-bills, but you do not want to incur the transaction costs of liquidating and re-establishing your equity position. Instead, you decide to hedge your portfolio with three-month S&P/TSX 60 index futures contracts for one month. Currently, the level of the S&P/TSX 60 index is 851.38, the three-month futures price of the S&P/TSX 60 is 856.40, and one contract is for $200 times…
You have decided to invest in an open-end mutual fund. You are currently looking at a fund-Washington Premier Fund-in your newspaper. The fund is quoted as: Name NAV Net Chg YTD %RET 36.25 0.15 6.95 Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this morning, then you should expect to pay for each share of since it Yesterday, each share of sold for $35.95 $43.50 $36.25 $34.44 $0.15 less $0.15 more $6.95 less $6.95 more If you had $8,000 available to invest, you could purchase than it did the day before, and offers a return of 294 368 assesses a 0.15% fee 276 shares of. is a no-load fund charges a 6.95% fee 221 Your evaluation of the Washington Premier Fund is made easier by the fact that: your investment choices are limited. mutual funds are careful to explicitly state their investment objectives. a mutual fund broker will select a customized mix for you. 0.15% 36.25% 6.95% for the year.
1.Which of these is an example of an index (and would have a corresponding Index Fund)? Question options: Apple stock US Treasury bonds A target retirement fund The S&P 500 2. Suppose you put $1,000 in an account that earns 5% interest per year, every year. You never invest additional money and you never withdraw money or interest payments. So in the first you, you earn $50 in interest. In Year 4, how much will this account earn? Question options: Less than $50 More than $50 $50 This is too hard.
8. Risk and return Suppose Valerie is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks. The following table shows the risk and return associated with different combinations of stocks and bonds. Fraction of Portfolio in Diversified Average Annual Standard Deviation of Portfolio Return Stocks Return (Risk) Combination (Percent) (Percent) (Percent) 1.00 B 25 2.00 5. 50 3.00 10 75 4.00 15 100 5.00 20 If Valerie reduces her portfolio's exposure to risk by opting for a smaller share of stocks, she must also accept a average annual return. Suppose Valerie currently allocates 25% of her portfollo to a diversined group of stocks and 75% of her portfolio to risk-free bonds; that is, she chooses combination B. She wants to increase the average annual return on her portfolio from 2% to 4%. In order to do so, she must do which of the following? Check all that apply. O Sell some of her stocks and place the proceeds…
8 Do stock prices and interest rates tend to move in opposite or the same direction? Explain the basis for this.
6. A) If a company will pay $100,000 for a truck that will increase deliveries to be made, giving an additional $15,000 in revenue each year for 10 years, should the company buy it? Interest rates are 5%. Show your math. B) Now revenue is estimated to be only $12,000 a year for 10 years. Same interest rate, should the truck be purchased? C) Explain where interest rates come from, using details.
1.Taylor's Development has recently listed its latest housing project on the market. These well- appointed houses have all the amenities of modern living and ample space to facilitate needed expansion.Located 10km from Falmouth town, these houses are located close to schools, commercial centers, hospital,police station and churches.There are 3 detached two bedroom houses priced at $13 million each and 20 detached three bedroom houses priced at $16 million each.Adam Spence, the sole owner of Spence's Garage, has approached your institution and requested $14 million to purchase a three-bedroom dwelling for residential purpose.ldentify and explain the different elements in assessing Adam's creditworthiness; ensure your analysis entails practical examples .
6. Jerry plans to buy a new Bluetooth headset. He knows that the same product is offered in different shops with prices of $44, $49, and $60, and with odds of one-third of finding each price. He just stopped at a shop and knows that their price is $49. If the search cost is $1 per additional search, what should Jerry do?
8. Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks? A) identity theft B) a margin purchase C) insider trading D) collusion 9. What is the environment where a firm conducts business known as A) Global business environment B) Economic environment C) Domestic business environment D) Technological environment
Question 3 Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12. Now, suppose you have decided to sell one of the stocks in your portfolio with a beta equal to 1.0 for 7,500 and to use these proceeds to buy another stocks for your portfolio. Assume the new stock's beta to 1.75. Calculate your portfolio's new beta.