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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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<h3>What is the management structure of Tesla?</h3>

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Tesla is a company that is reported to use functional centers that are well-structured and cover all aspect of their business operations, including finance, sales, marketing, and technology.

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3 years ago
In one year, Hitech Microdevices will pay a common stock dividend of $4.35. You predict that you will be able to sell your Hitec
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Answer:

Price to be paid now = $52.89

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<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return. </em>

T<em>he stock would be held for just a period, hence we would use the single period return model. This is given as follows:</em>

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