6. Microsoft has an Expected Return of 44%, and standard deviation of 24%. Wal-Mart has anexpected return of 23%, and a standard deviation of 14%. The correlation between Wal-Martand Microsoft is 0.7. What is the standard deviation of a portfolio that invests 25% in Mi-crosoft and 75% in Wal-Mart?A) You don't have enough informationB) 15.3%C) 5.7%D) 12.2%E) 17.4%

Expected return of Microsoft is 44% Standard deviation "SD" of Microsoft is 24% Walmart's standard…

Microsoft has an Expected Return of 44%, and standard deviation of 24%. Wal-Mart has a expected return of 23%, and a standard deviation of 14%. The correlation between Wal-Ma and Microsoft is 0.7. What is the standard deviation of a portfolio that invests 25% in M crosoft and 75% in Wal-Mart? A) You don't have enough information B) 15.3% C) 5.7% D) 12.2% E) 17.4%

Microsoft has an Expected Return of 44%, and standard deviation of 24%. Wal-Mart has a expected return of 23%, and a standard deviation of 14%. The correlation between Wal-Ma and Microsoft is 0.7. What is the standard deviation of a portfolio that invests 25% in M crosoft and 75% in Wal-Mart? A) You don't have enough information B) 15.3% C) 5.7% D) 12.2% E) 17.4%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Dhofar Energy Services has a Beta = 1.04 The risk-free rate on a treasury bill is currently 4.4% and the cost of equity has 20.70%. What is the market return? Select one: a. 0.2007 b. 0.2088 c. 0.2402 d. All the given choices are not correct e. 1.1567
Q1) UPS, a delivery services company, has a beta of 1.1, and Wal-Mart has a beta of 0.7. The risk-free rate of interest is 4% and the market risk premium is 7%. What is the expected return on a portfolio with 30% of its money in UPS and the rest in Wal-Mart? Q2) IBM’s σ = 0.22; Dell’s σ = 0.13. The correlation between Dell and IBM is 0.32, and the weights are 50% each. Find the portfolio volatility (standard deviation). If the weights are now 30 % and 70 % for Dell and IBM respectively, how would the volatility of portfolio change? Briefly justify your answer.
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