1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
cluponka [151]
3 years ago
5

Chris Smith owns a portfolio consisting of two stocks, Amazon and Apple, Inc. Chris owns $2,000 of Amazon and $6,500 of Apple, I

nc. Chris has computed the expected return on Amanzon to be 8.2% and the expected return on Apple, Inc. to be 9.5%. The standard deviation of the returns on Amazon is 5.07% and the standard deviation of the returns on Apple, Inc. is 6.84%. The covariance on the returns of the two companies is -0.0014.
1. What is the expected return on Chris’ portfolio?

a. 6.39 percent
b. 7.70 percent
c. 9.99 percent
d. 7.89 percent
e. 9.19 percent

2. . What is the risk of this portfolio (measured by standard deviation)?

a. 4.87 percent
b. 4.26 percent
c. 2.73 percent
d. 7.46 percent
e. 3.82 percent
Business
1 answer:
Lilit [14]3 years ago
6 0

Answer:

0.0919411

4.87%

Explanation:

Given that:

AMAZON :

Investment = $2000

Expected return = 8.2%

Standard deviation = 5.07%

APPLE :

Investment = $6500

Expected return = 9.5%

Standard deviation = 6.84%

Total investment = $(2000 + 6500) = $8500

Amazon investment weight :

2000 / 8500 = 0.2353

Apple investment weight :

6500 / 8500 = 0.7647

Expected return on portfolio:

(Amazon weight * Amazon expected return) + (apple weight * apple expected return)

= (0.2353 * 0.082) + (0.7647 * 0.095)

= 0.0919411

= 0.0919411 * 100%

= 9.19411 = 9.19%

Portfolio risk :

Sqrt[(Amazon weight ² * amazon standard deviation²) + (apple weight ² * apple standard deviation ²) + 2 (weight of Amazon * weight of apple * covariance)]

Sqrt[(0.2353^2 * 0.0507^2) + (0.7647^2 * 0.0684^2) + 2(0.2353 * 0.7647 * - 0.0014)

Sqrt(0.0023743662707145)

= 0.0487274

= 0.0487274 * 100%

= 4.87%

You might be interested in
The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year en
adoni [48]

Answer:

Abbot makes a savings of $74,000 in the current year.

Review full presentation of answers in the attaches

Explanation:

4 0
3 years ago
Read 2 more answers
Suppose you win the lottery and have two options: A. Take $1 million now. B. Take $1.2 million to be paid out as 300,000 now and
laila [671]

Answer:

A. Take $1 million now.

Explanation:

A. If we take $1 million now the present value of the money is $1 million.

B. If we choose to take $1.2 million paid out over 3 years then present value will at 10% will be;

$300,000 + $300,000 / 1.2 + $300,000/ 1.44 + $300,000 / 1.728

$300,000 + $250,000 + $208,000+ $173,611 = $931,944

The present value of option B is less than present value of option A. We should select option A and take $1 million now.

4 0
3 years ago
A new faculty member at the local university pays $1,500 per month to rent an apartment in the downtown area. She teaches on cam
Naddik [55]

Answer:

$2,700

Explanation:

Calculation for what should this professor be willing to pay in rent per month

First step is to calculate the Transportation cost per week

Transportation cost = ($25*4 hrs)* 3 per week

Transportation cost =$100*3 per week

Transportation cost= 300 a week

Now let calculate the rent per month

Rent per month= $1500 + ($300*4)

Rent per month=$1,500+$1,200

Rent per month= $2,700

Therefore what should this professor be willing to pay in rent per month to live near campus if her hourly wage rate is $25 will be $2,700

3 0
3 years ago
This is an online live debate first 2 people to comment are the debaters the rest are the jury and they reply to chat the debate
Lana71 [14]
Hello there!

Let's take note of some things first. When a argument occurs, there's always two different kind of people. You would have someone who think he has a point and he explains his opinion on this matter, and then you would have the other opponent who would most likely say the complete opposite of this other person.

Now, when conduction the argument of the topic "cell phones", there would be a ton of different opinions on this matter.

For an example:

(Person #1) - opposer.

Cell Phone's are very useful, when you need to call a person, you would have something to communicate with the other person. It would be encounter as a essential in our every day life.

 (Person #2) - opposer.

I believe that Cell Phones are unsafe. People could track you down and hurt you to the full. They can take your information, and then you would have some several bad cases on this matter. I believe that Cell Phones are not safe.
                                            __________
Based on looking at this example here, you would see on how they're are two different opinions here. They both have different explanations.

I hope this helps you!
8 0
3 years ago
Read 2 more answers
. For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual in
Zielflug [23.3K]

Answer:

Inventory cost will be $3

So option (b) is correct option

Explanation:

We have given that carrying and setup cost is $600

So carrying and setup cost = $600

And EOQ = 200 units

We have to find the inventory carrying cost per year

We know that inventory carrying cost is given by

inventory carrying cost =\frac{carrying\ and\ setup\ cost}{EOQ}=\frac{600}{200}=$3

So option (b) will be correct option

4 0
3 years ago
Other questions:
  • Many firms are finding that high-tech, computerized training has dual benefits. It develops employees who are more effective and
    6·1 answer
  • Suppose a bout of severe weather drives up agricultural costs, increases the costs of transporting goods and services, and incre
    10·1 answer
  • George operates a business that generated revenues of $51 million and allocable taxable income of $1.26 million. Included in the
    15·2 answers
  • Explain why monopoly is uncommon in the real world
    6·1 answer
  • On January 1, 2015, Alpha Manufacturing purchased a machine for $920,000. The company expects the machine to remain useful for e
    9·1 answer
  • Mariposa, a young office manager, is trying to exchange text messages with her supervisor, Bill. Although Bill has been the gene
    15·1 answer
  • When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ s
    15·1 answer
  • Who else is sitting somewhere, bored ash, looking for a convo?
    9·1 answer
  • Question 6
    14·1 answer
  • In some simple models of trade, a country may choose to specialize in the production of a single good. which is not an argument
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!