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FinnZ [79.3K]
3 years ago
14

Suppose you have a two-stock portfolio consisting of Apple and Tesla stock. The portfolio weight of Apple is 25% and the rest is

Tesla. The volatility of annual returns is 35% for Apple and 60% for Tesla. The correlation coefficient between the two stocks' returns is 0.22. What's the volatility of your portfolio?
Business
1 answer:
iren [92.7K]3 years ago
4 0

Answer:

Standard deviation = 47.69% (Approx)

Explanation:

Given:

Portfolio of Apple stock w1 = 25% = 0.25

Portfolio of Tesla stock w2 = 75% = 0.75

Standard deviation return Apple σ1 = 35% = 0.35

Standard deviation return Tesla σ2 = 60% = 0.60

Correlation coefficient ρ12 = 0.22

Find:

Standard deviation

Computation:

Standard deviation = √w1²σ1² + w2²σ2² + 2w1σ1w2σ2ρ12

Standard deviation = 0.4769

Standard deviation = 47.69% (Approx)

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3 years ago
Ale Corporation had net income of $240,000 and paid dividends to common stockholders of $40,000 in 2017. The weighted average nu
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Answer:

The price earnings ratio is 19:1

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The price earnings ratio tells us that how much price the investors are willing to pay for $1 of earnings provided by the company. The price earnings ratio is calculate by dividing the price per share by the earnings per share.

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3 years ago
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