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Alchen [17]
2 years ago
5

A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 23%, while stock B has a standard

deviation of return of 29%. Stock A comprises 70% of the portfolio, while stock B comprises 30% of the portfolio. If the variance of return on the portfolio is 0.042, the correlation coefficient between the returns on A and B is _________. Multiple Choice 0.088 0.304 0.213 0.091
Business
1 answer:
VARVARA [1.3K]2 years ago
4 0

Answer:

0.304

Explanation:

The calculation has been done step by step in order to understand the final result. Note that (p) in the below working refers to the correlation coefficient between Stock A and B.

0.042 = (0.70^2)(0.23^2) + (0.30^2)(0.29^2) + 2(0.70)(0.30)(0.23)(0.29)p

0.042 = 0.0259 + 0.0076 + 0.028p

0.042 = 0.0335 + 0.028p

0.042 - 0.0335 = 0.028p

0.0085 = 0.028p

p = 0.0085 / 0.028

p = 0.304

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Hunter-Best [27]

The amount of money in the account at the end of the period will be $2907.89.

<h3>What is the investment?</h3>
  • The dedication of an asset to achieve a gain in value through time is referred to as an investment.
  • Investment necessitates the sacrifice of a current item, such as time, money, or effort.
  • The goal of investing in finance is to earn a return on the invested asset.
  • A gain (profit) or loss realized through the sale of a property or investment, unrealized capital appreciation (or depreciation), or investment income such as dividends, interest, or rental income, or a mix of capital gain and income, may constitute the return.
<h3>To find the amount of money in the account at the end of the period:</h3>

Step 1: Define

Identify variables

P = 930

t = 19

r = 6% = 0.06

Step 2: Find Interest

Substitute in variables [Compounded Continuously Formula]: A=930e^{} ^{19*0.06}                  

[Exponents] Multiply:    

A=930e^{1.14}                                                                                  

Evaluate exponents:            

A=930(3.12677)                                                                            

Multiply:            

A=2907.89

Therefore, the amount of money in the account at the end of the period will be $2907.89.

Know more about investment here:

brainly.com/question/25300925

#SPJ4                                                                                      

5 0
1 year ago
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