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Drupady [299]
2 years ago
8

Volusia, Inc. Is a U. S. -based exporting firm that expects to receive payments denominated in both euros and Canadian dollars i

n one month. Based on today's spot rates, the dollar value of the funds to be received is estimated at $500,000 for the euros and $300,000 for the Canadian dollars. Based on data for the last fifty months, Volusia estimates the standard deviation of monthly percentage changes to be 8 percent for the euro and 3 percent for the Canadian dollar. The correlation coefficient between the euro and the Canadian dollar is 0. 30. What is the portfolio standard deviation
Business
1 answer:
NARA [144]2 years ago
5 0

From the details that are contained in the question, the portfolio standard deviation is 0.0544 or 5.44%

<h3>How to solve for the portfolio standard deviation</h3>

w1 = weight of euros 1 = 500000/800000

w2 = weight of canadian dollars = 300000/800000

Standard deviation 1 = 8%

Standard deviation 2 = 3%

Correlation coefficient = 0.30

(w1*σ1)² + (w2*σ2)² + (2* w1*σ1* w2*σ2 * 0.30)^0.5

((0.625*0.08)^{2} +(0.375*0.03)^{2} +(2*0.625*0.08*0.375*0.03*0.3)^0^.^5\\\\= 0.0544

Therefore the portfolio standard deviation is given as 0.0544 or 5.44%

Read more on standard deviation here: brainly.com/question/475676

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Explanation:

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For Loading and unloading, it would be

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3 years ago
A firm has $800,000 in paid-in-capital, retained earnings of $40,000 (including the current year's earnings), and $25,000 shares
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On January 1, 2021, Nana Company paid $100,000 for 8,000 shares of Papa Company common stock, which represents 10% ownership. Pa
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