- A You Have Two Stocks A And B That You Are Going To Combine In A Portfolio Stock A Has An Expected Return Of 15 And 1 (57.78 KiB) Viewed 60 times
You own positive amounts of the stock of two companies in your portfolio (i.e., you have weights greater than 0%, but less than 100% for each of the two securities). Stock X has an expected return of 10% with a standard deviation of 40%. Stock Y has an expected return of 20% with a standard deviation of 50%. Without knowing the correlation between the two stocks, which of the following statements could be true? I. The standard deviation of your portfolio can be less than 40%. II. The standard deviation of your portfolio can be greater than 50%. III. The expected return of your portfolio can be less than 10%. IV. The expected return of your portfolio can be greater than 20%. I only O ll only Ill only IV only More than one of the above statements (I, II, III, IV) could be true.
The following table gives the expected returns for two stocks: Returns Probability Stock X Stock Y 0.35 -30% 10% 0.45 20% 5% 0.20 40% 15% If you form a portfolio of the two stocks with 70% of your wealth in X and 30% of your wealth in Y, what is the portfolio's standard deviation? Select the range that includes the correct solution. O Less than 17% Greater than or equal to 17%, but less than 18% O Greater than or equal to 18%, but less than 19% O Greater than or equal to 19%, but less than 20% Greater than or equal to 20%
You have put together a portfolio of 3 stocks. Stock A has an expected return of 12%. Stock B has an expected return of 8%. Stock C has an expected return of 15%. You have 5% of your money in Stock A, 15% of your money in Stock B, and the remaining 80% in Stock C. The correlation between A and B is 0.30, the correlation between A and C is 0.65, and the correlation between B and C is 0.10. What is the expected return for your portfolio? Only round your final answer. 13.80% O 11.67% O 9.72% 14.44% O None of the above are correct.