I WILL ONLY RATE IF THE COMPUTER TELLS ME IF THE ANSWER IS CORRECT. SERIOUS TUTO

Question

I WILL ONLY RATE IF THE COMPUTER TELLS ME IF THE ANSWER IS CORRECT. SERIOUS TUTOR ONLY. THANKS

You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 10 percent and 14 percent, respectively. The standard deviations of the assets are 34 percent and 42 percent, respectively. The correlation between the two assets is .51 and the risk-free rate is 4.8 percent. What is the optimal Sharpe ratio in a portfolio of the two assets? What is the smallest expected loss for this portfolio over the coming year with a probability of 5 percent? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your Sharpe ratio answer to 4 decimal places and Probability answer to 2 decimal places. Omit the "%" sign in your response.)

I WILL ONLY RATE IF THE COMPUTER TELLS ME IF THE ANSWER IS CORRECT. SERIOUS TUTOR ONLY. THANKS

You are constructing a portfolio of two assets, Asset A and Asset B. The expected returns of the assets are 10 percent and 14 percent, respectively. The standard deviations of the assets are 34 percent and 42 percent, respectively. The correlation between the two assets is .51 and the risk-free rate is 4.8 percent. What is the optimal Sharpe ratio in a portfolio of the two assets? What is the smallest expected loss for this portfolio over the coming year with a probability of 5 percent? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your Sharpe ratio answer to 4 decimal places and Probability answer to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Sharpe ratio = Expected return of asset - Risk-free rate / Standard deviation of asset

Sharpe ratio of Stock A in the portfolio = 10 - 4.8 / 34 = 5.2 / 34 = 0.1529

Sharpe ratio of Stock B in the portfolio = 14 - 4.8 / 42 = 9.2 / 42 = 0.2190

Conclusion:-

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