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tester [92]
3 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]3 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:

changing the subject                                

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3 years ago
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During June, Buttrey Corporation incurred $72,000 of direct labor costs and $12,000 of indirect labor costs. The journal entry t
romanna [79]

The correct question is:

During June, Buttrey Corporation incurred $67,000 of direct labor costs and $7,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

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Answer:

a. debit to Work in Process of $67,000

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Labour costs are made up of direct labour cost and indirect labour costs.

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7 0
2 years ago
A company plans to enclose three parallel rectangular areas for sorting returned goods. The three areas are within one large rec
Ganezh [65]

Answer:

A lot of information is missing, so I looked for similar questions:

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now we replace in the area equation:

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When you have a rectangle, the largest possible area is a square, where both sides have the same length.

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Answer:

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given data

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Answer:

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