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RUDIKE [14]
3 years ago
12

33). You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put

the rest of you money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolio have a correlation 0.55. The standard deviation of the resulting portfolio will be ________________.
Business
1 answer:
Natalija [7]3 years ago
4 0

Answer:

16.0996% rounded off to 16.1%

Explanation:

We can calculate the standard deviation of a portfolio, that is the total risk of a portfolio, using the following formula,

S.D = √ (w1)² (S.D1)² + (w2)² (S.D2)² + 2 (w1) (w2) (correlation) (S..D1) (S.D2)

Where,

  • w1 is the weigh-age of investment in stock/bond 1
  • S.D1 is standard deviation of returns of stock/bond 1
  • w2 is the weight-age of stock/bond 2
  • S.D2 is the standard deviation of returns of stock/bond 2
  • correlation is the correlation between the returns of stock/bond 1 and 2

We calculate the S.D of given portfolio,

S.D = √ (0.5)² (0.24)² + (0.5)² (0.12)² + 2 (0.5) (0.5) (0.55) (0.24) (0.12)

S.D = 0.160996 or 16.0996 %

 

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2 years ago
The First National Bank has total deposits of $675,000 and excess reserves of $22,300. If the required reserve ratio is 9 percen
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Answer: $83050

Explanation:

Based on the information given in the question, the total reserves of First National Bank will be given as follows:

Total deposit = $675000

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Since the bank has excess reserves of $22,300, then the total reserve will be:

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= $83050

3 0
2 years ago
construct a quadriteral PQRS, given that QR=4.5cm PS=5.5cm,RScm5cm and diagonalPR=5.5cmand diagonal SQ=7cm​
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3 0
3 years ago
Lent Corporation converts to S corporation status in 2018. Lent had been using the LIFO inventory method and held a LIFO invento
Licemer1 [7]

Answer:

The tax that must be added to the C corporation tax liability for the year before the S election = $49000*1/4=$12250

The rest of the three instalments of $12250 each will be paid with Lent Corporation's next three tax returns

Explanation:

FIFO Value/basis =$650000

LIFO value/basis =$510000

Difference =$140000

35% Tax =$140000*35% = $49000

The tax that must be added to the C corporation tax liability for the year before the S election = $49000*1/4=$12250

The rest of the three instalments of $12250 each will be paid with Lent Corporation's next three tax returns

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Answer

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An increase demand on assets by investors will make the price to increase beyond rational economic value. The real worth of the stock will now be determined by firm’s performance. Investing in bubble can appear to last forever, but because they are formed by self-perpetuated reasons, they eventually fall and the money that was invested into them is lost. In such cases, investors would run to withdraw their money and avoid the loss of fall in share prices.

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