portfolio ret m and standard deviation P o al France Prose Jartie worg?cors een
ID: 2618215 • Letter: P
Question
portfolio ret m and standard deviation P o al France Prose Jartie worg?cors een g bulang an nesme t potolo co tan g ???mos L and M Stock L wil eeresent 75% of the v? e of the portfolo, and Stock M acco t for the er 25% The expected renns over the next 6 years, 2015-2020 for each ofthese stock3 are shown rhe!olong table & Caloulate the expected pontli netum for each of the years b. Calculate ???..pected vue of portola fWurns,' over the 6-year d C Calculate the standard deven of epected portl netansover the -yerperod Data Table would you characterize the comelation of neturns of two stocks L Cck on he lcon located on the op-right corner of the data table below in order to Discuss any beneits of divesificaion acieved by Jame trough creaton of the portolio a The espected portolio return for year 2015 sRound to two decimal places Theexpected portoloretrnfor year 2016 ?% (ROnd to two decinal places) The expected portholo returm for year 2017Round to two decimal places The expected porttolo etum for year 2018(Round to two decimal place 20 2016 2017 2018 2010 20% ,5% * expected portfololeturn for year 2019???(Round to h#0 decinal places Thé expected portfoleret mnr year 2020 ?% (Round to two decanal places) b. The expected vaue of porttio returns, '..ovene6 year peodisDb (Round to two decrnal places > The standard devianon of expected portolio returms. over the 6-year penod is sRound to two decimal places d. How would you characterize the corelation of neturms of the two stocks L and M? (Select the best answer below) Print DoneExplanation / Answer
a.
Expected return=75%*return of L + 25%*return of M
=75%*16%+25%*21%=17.25%
=75%*18%+25%*19%=18.25%
=75%*20%+25%*17%=19.25%
=75%*21%+25%*15%=19.50%
=75%*23%+25%*13%=20.50%
=75%*25%+25%*11%=21.50%
b.
=(17.25%+18.25%+19.25%+19.50%+20.50%+21.50%)/6=19.375%
c.
Standard devaition=1.3901%
d.
correlation=-0.996790577
So, close to perfect negative correlation, when one goes up the other goes down and viceversa
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.