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
sineoko [7]
2 years ago
5

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 16% and a standard devi

ation of return of 18.0%. Stock B has an expected return of 12% and a standard deviation of return of 3%. The correlation coefficient between the returns of A and B is 0.50. The risk-free rate of return is 10%. The proportion of the optimal risky portfolio that should be invested in stock A is
Business
1 answer:
ElenaW [278]2 years ago
6 0

The proportion of the optimal risky portfolio that should be invested in stock A is 0%.

Using this formula

Stock A optimal risky portfolio=[(Wa-RFR )×SDB²]-[(Wb-RFR)×SDA×SDB×CC] ÷ [(Wa-RFR )×SDB²+(Wb-RFR)SDA²]- [(Wa-RFR +Wb-RFR )×SDA×SDB×CC]

Where:

Stock A Expected Return  (Wa) =16%

Stock A Standard Deviation (SDA)= 18.0%

Stock B Expected Return  (Wb)= 12%

Stock B Standard Deviation(SDB) = 3%  

Correlation Coefficient for Stock A and B (CC) = 0.50  

Risk Free rate of return(RFR) = 10%

Let plug in the formula

Stock A optimal risky portfolio=[(.16-.10)×.03²]-[(.12-.10)×.18×.03×0.50]÷ [(.16-.10 )×.03²+(.12-.10)×.18²]- [(.16-.10 +.12-.10 )×.18×.03×0.50]

Stock A optimal risky portfolio=(0.000054-0.000054)÷(0.000702-0.000216)

Stock A optimal risky portfolio=0÷0.000486×100%

Stock A optimal risky portfolio=0%

Inconclusion the proportion of the optimal risky portfolio that should be invested in stock A is 0%.

Learn more here:

brainly.com/question/21273560

You might be interested in
On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows:
emmasim [6.3K]

Answer:

In Robers Company:

Debit Accumulated depreciation $75,000

Debit Equipment $72,500

Debit Cash $10,000

Credit Equipment $145,000

Credit Gain on exchange asset $12,500

In Phifer Corporation

Debit Accumulated depreciation $83,000

Debit Equipment $82,500

Debit Loss on exchange asset $9,500

Credit Cash $10,000

Credit Equipment $165,000

Explanation:

In Robers Company:

Book value of the equipment =  $145,000 - $75,000 = $70,000

Fair value of the equipment: $82,500 > Book value

The company will record gain on exchange:

Debit Accumulated depreciation $75,000

Debit Equipment $72,500

Debit Cash $10,000

Credit Equipment $145,000

Credit Gain on exchange asset $12,500

In Phifer Corporation

Book value of the equipment =  $165,000 - $83,000 = $82,000

Fair value of the equipment: 72,500 < Book value of the equipment

The company will record loss on exchange:

Debit Accumulated depreciation $83,000

Debit Equipment $82,500

Debit Loss on exchange asset $9,500

Credit Cash $10,000

Credit Equipment $165,000

5 0
3 years ago
The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly.
katen-ka-za [31]

Answer:

Allocated MOH per unit= $45.94

Explanation:

Giving the following information:

Product Number of Units Labor Hours Per Unit

Blinks 1,178 2  

Dinks 2,060 3

Estimated overhead costs for the period= 108,300 + 87,800= $196,100

Total direct labor hours= (1,178*2) + (2,060*3)= 8,536

<u>First, we need to calculate the predetermined overhead rate:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 196,100 / 8,536

Predetermined manufacturing overhead rate= $22.97 per direct labor hour

<u>Now, we allocate overhead to Blinks:</u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 22.97*2= $45.94

5 0
3 years ago
A popular television program called the swan aimed to turn less visually appealing people into more socially acceptable ones by
Sati [7]
<span>This is an example of, "medicalization and the social construction of health and illness".

</span><span>Medicalization is examined from a sociologic point of view regarding the part and energy of experts, patients, and enterprises, and furthermore for its suggestions for ordinary individuals whose self-character and life choices may rely upon the overall ideas of health and illness.
</span>
3 0
3 years ago
How can professional education improve the life of people​
devlian [24]

The education or educational programs which helps us to get the required practical and theoretical knowledge is called professional education. If we are provided with professional education it helps us to improve the lifestyle of people. We get job according to our knowledge. Which means if we have got professional education it helps us to get better job which provides us with good amount of money. And if we provided with better money our standard of living becomes good.

3 0
2 years ago
True or False: Food Corp., a business with its headquarters and major operations in the United States of America, also has an of
mote1985 [20]

Answer: False

Explanation:

The Minimum Wages Law is simply referred to as a labour law which entails that employees should be paid a certain amount of minimum wage and shouldn't be paid below that.

We should note that the wages law are different for countries. Thereby the minimum wage law set in USA may be different from that of France.

Therefore, even if Food Corp.’s is subject to U.S. Federal minimum wage laws in its office in the U.S.A, it can't be subjected to U.S. Federal minimum wage laws in overseas in France.

Therefore, the answer is false.

7 0
2 years ago
Other questions:
  • The Retained Earnings balance was $24,100 on January 1. Net income for the year was $19,900. If Retained Earnings had a credit b
    11·1 answer
  • Which group works to help members establish internal political stability?
    6·2 answers
  • Government survey takers determine that typical family expenditures each month in the year designated as the base year are as fo
    5·1 answer
  • The information needed to identify lines and other symbols on a construction drawings can be found in the
    6·1 answer
  • Please help I will give branniest and I upped the points
    13·1 answer
  • The receipt of dividends and interest from abroad as a result of ownership of foreign assets by a country's residents is recorde
    13·1 answer
  • tulip Co. owns 100% of Daisy Co.'s outstanding common stock. Tulip's cost of goods sold for the year totals $600,000, and Daisy'
    12·2 answers
  • Presented below is information for Marin Company.
    12·1 answer
  • 100 points! PLEASE HELP. DO NOT SKIP THIS!
    11·2 answers
  • Return on sales for south drive is lower in year 2 than year 1 what expense is causing this lower?
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!