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kifflom [539]
2 years ago
8

You invest 60% of your financial assets in Standard & Poor’s Depository Receipts with an expected return of 10% and a standa

rd deviation of 20% and 40% of your financial assets in MSCI EAFE Index Fund with an expected return of 12% and a standard deviation of 30%. The correlation between the two investments is 35%. What are the expected return and the standard deviation of your portfolio?
Business
1 answer:
vova2212 [387]2 years ago
7 0

Answer:

Expected Return = 10.80%

Standard Deviation = 19.72%

Explanation:

Amount invested in Standard & Poor’s Depository Receipts = 60%

Expected return of Standard & Poor’s Depository Receipts = 10%

standard deviation of Standard & Poor’s Depository Receipts = 20%

Amount invested in MSCI EAFE Index Fund = 40%

Expected return of MSCI EAFE Index Fund = 12%

Standard deviation of MSCI EAFE Index Fund = 30%

Correlation between the two investments = 35%

Now,

Expected Return = ∑(Amount invested × Expected rate of return)

= 0.60 × 0.10 + 0.40 × 0.12

or

= 10.80%

Standard Deviation = √(∑(Amount invested × Standard deviation))²

= √[(0.60)²(0.20)² + (0.40)²(0.30)² + 2(0.60)(0.40)(0.20)(030)(0.35)]

or

Standard Deviation = 19.72%

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A parcel of real estate has been left to a woman through her husband's will for her use and enjoyment during her lifetime, with
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3 years ago
Kingbird Company has the following stockholders’ equity accounts at December 31, 2017.Common Stock ($100 par value, authorized 8
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Answer:

Journal Entries :

1.

Common Stocks $29,400 (debit)

Cash $29,400 (credit)

2.

Dividends Declared $174,300 (debit)

Shareholders for Dividends $174,300 (credit)

3.

Shareholders for Dividends $174,300 (debit)

Cash $174,300 (credit)

4.

Cash $30,600 (debit)

Common Stocks $30,600 (credit)

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Common Stocks $48,300 (debit)

Cash $48,300 (credit)

6.

Cash $29,100 (debit)

Common Stocks $29,100 (credit)

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Common Stocks $29,400 (debit)

Cash $29,400 (credit)

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Dividends Declared $174,300 (debit)

Shareholders for Dividends $174,300 (credit)

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<em>Note : Recognize the Liability : Shareholders for Dividends and recognise the Equity Element : Dividends Declared</em>

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Shareholders for Dividends $174,300 (debit)

Cash $174,300 (credit)

<em>Note : De-recognize the Liability : Shareholders for Dividends and De -recognize the Assets of Cash.</em>

4.

Cash $30,600 (debit)

Common Stocks $30,600 (credit)

Proceeds  = 300 shares × $102 = $30,600

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Cash $48,300 (credit)

Purchase Cost = 460 shares × $105 = $48,300

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Cash $29,100 (debit)

Common Stocks $29,100 (credit)

Proceeds  = 300 shares × $97 = $29,100

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