The following are estimates for two stocks. The market index has a standard devi

Question

The following are estimates for two stocks. The market index has a standard deviation of 25% and the risk-free rate is 9%. What are the standard deviations of stocks A and S? (Do not round intermediate calculations. Enter your responses as decimal numbers rounded to 2 decimal places). Suppose that we were to construct a portfolio with proportions: Suppose that we were to construct a portfolio with proportions: Compute the expected return, standard deviation, beta, and nonsystematic standard deviation of the portfolio. (Do not round intermediate calculations. Enter your answer for Beta in numbers, not in percentage. Round your answers to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

(A) What are the Standard Deviation of the stock A and B.

Standard Deviation = (proportion of portfolio ( Stock Return - expected Return))1/2

Stock A = (0.5 (28-8)2)1/2 = 14.14%

Stock B = (0.5 (40-16)2)1/2 = 17.67%

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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