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tester [92]
4 years ago
9

6. Asset 1 has an expected mean return of µ1 =9%, standard deviation of its return is σ1 = 6%. Asset 2 has an expected mean retu

rn of µ2 = 14%, with a standard deviation of σ2 = 11%. The correlation coefficient between returns on these two assets is rho1,2 = −1. If you invest all your financial wealth on a portfolio holding only these two assets such that w1 + w2 = 1. How should you choose weights w1and w2 such that the portfolio is risk free (i.e., σp = 0)? In that scenario, what is your expected return on that portfolio, E (rp)?
Business
1 answer:
Paraphin [41]4 years ago
4 0

Answer:

Weight w1 = 0.65

Weight w2 = 0.35

Expected return =10.75%

Explanation:

w1 + w2 = 1 ........... (1)

w1 = SD of asset 2/(SD of asset 1 + SD of asset 2)

w1 = 11 ÷ (6 + 11) ⇒ 0.65

∴ w2 = 1 - w1 ⇒ 1 - 0.65

w2 = 0.35

Expected return = Weighted average

[0.65 × 9] + [0.35 × 14] ⇒ 10.75%

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Answer:

$680,000 vs $440,000

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Total Costs to Make :

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Total                                                                                          $680,000

Total Cost to Buy :

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<u>Less Savings :</u>

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Total Cost                                                                                  $440,000

7 0
3 years ago
Manufacturing companies especially those which manufacture chemicals or use chemicals must be in compliance with construction la
wolverine [178]

Answer: right to know laws

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This law specifies perspectives such as:-

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2. Labeling of chemical containers must be done.

3. Material safety data sheets must be prepared.

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3 0
3 years ago
Jamie earned a raise in pay when he finished the training for the Technician 2 position. He will receive another raise when he f
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5 0
3 years ago
Benjamin Garcia's start-up business is succeeding, but he needs $210,000 in additional funding to fund continued growth. Benjami
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Answer:

Missing word <em>"Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant"</em>

<em />

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Fair Price = Current Value of Business/Number of Outstanding Shares

Fair Price = $840,000 / 37,000 shares

Fair Price = 22.7027027

Fair Price = $22.70.

Number of Additional Shares = Additional Funding Required/Fair Price Per Share =

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6 0
3 years ago
The Super Toy Stores inventory records at December 31, revealed the following: Inventory on hand, December 31 $350,000 Merchandi
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Answer:

The correct answer is $543,000

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= $543,000

The goods held on consignment i.e. not involved is not relevant

Thus, the  calculation of the ending inventory is $543,000

8 0
3 years ago
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