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defon
3 years ago
10

You have $ 10 comma 000 to invest. You decide to invest $ 20 comma 000 in Google and short sell $ 10 comma 000 worth of​ Yahoo!

Google's expected return is 15 % with a volatility of 30 % and​ Yahoo!'s expected return is 12 % with a volatility of 25 %. The stocks have a correlation of 0.90. What is the expected return and volatility of the​ portfolio? The expected return is
Business
1 answer:
Naddik [55]3 years ago
5 0

Answer:

expected return is 18%

volatility of the​ portfolio 13.23 %

Explanation:

Your Investment: $ 10,000

Invest $ 20,000 in Google, Google's expected return is 15 %

Sell $ 10,000 worth of​ Yahoo! Yahoo! Yahoo!'s expected return is 12 %

=> The weight of your portfolio is 2 for the Google stock, and -1 for the Yahoo stock.  The negative sign for the Yahoo stock indicates a short position in the stock. The expected return is the weighted average of the returns on the two stocks:

  • 2 * 15% + (-1) * 12% = 18%

The volatility of the portfolio is:

\sqrt{2^{2}*0.15^{2} + -1^{2}*0.25^{2} +2*2*(-1)*0.9*0.15*0.25 } = 13.23 %

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A firm is a competitive seller of output at amarket price of $3. The only resource itrequires to create its product is labor, wh
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B. $6

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3 years ago
Waterway Industries had net income for 2021 of $602000. The average number of shares outstanding for the period was 208000 share
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3 years ago
Calculate gross profit for the following situation: National Storage Company had sales of $1,000,000, sales discounts of $2,500,
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$475,500

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prior to using the <u>Assumed names</u>

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For this there are certain rules as related to the names of such business.

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