Consider two stocks, Stock D, with an expected return of 16 percent and a standa

Question

Consider two stocks, Stock D, with an expected return of 16 percent and a standard deviation of 32 percent, and Stock I, an international company, with an expected return of 7 percent and a standard deviation of 12 percent. The correlation between the two stocks is

Consider two stocks, Stock D, with an expected return of 16 percent and a standard deviation of 32 percent, and Stock I, an international company, with an expected return of 7 percent and a standard deviation of 12 percent. The correlation between the two stocks is

Explanation / Answer

Correlation=-.01

Covarriance=.89

Minimum Varriance Portfolio=(Varriance-Covarriance)/sum of varriance-2covarriance

=(144-.89)/1166.22=.124

Weight in Second Sec.1-.124=.875

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.