90 10 stock portfolio
[DOC File]To Show : How Diversification Reduces Risk
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To Show : How Diversification Reduces Risk Diversification: Holding many stocks in one's portfolio. For simplicity, we consider a portfolio of two stocks. How do we measure portfolio risk? If stock returns are normally distributed, then a portfolio constructed from such stocks will also be normally distributed.
[DOC File]Exam questions - California State University, Northridge
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Therefore, the required return of a stock with a beta coefficient equal to 1.0 will increase by 1 percentage point, and statement c is correct. 53. A highly risk-averse investor is considering the addition of an asset to a 10-stock portfolio. The two securities under consideration both have an expected return, , equal to 15 percent.
[DOC File]PRACTICE PROBLEMS - University of Texas at El Paso
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(e) 7 Compute the coefficient of variation for your portfolio. a) 0.043. b) 0.12. c) 1.40. d) 0.69. e) 1.04. USE THE FOLLOWING INFORMATION FOR THE NEXT FOUR PROBLEMS. Assume that you hold a two stock portfolio. You are provided with the following . information on your holdings. Stock Shares Price(t) Price(t+1) 1 15 10 12 2 25 15 16
[DOC File]Answers to Text Discussion Questions
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*$10 ( 150% = $15 **$20 ( 90% = $18. c) Hodges Corporation has an initial weight of 75.19 percent in the index, while Snider Corporation is only weighted as 5.64 percent. Therefore, a 10 percent decline in Hodges Corporation’s stock turns out to be more important than the 50 percent gain in Snider Corporation’s stock.
[DOC File]CHAPTER 9 REVIEW
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5) Approximately 10% of the population of the United States is known to have blood type B. If this is correct, what is the probability that between 11% and 15% of a random sample of 50 adults will have type B blood? ANS: If p = 0.10, Then, or normalcdf(0.11, 0.15, 0.10, 0.042)
[DOC File]CHAPTER 1
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(d) 20 A friend has information that the stock of Zip Incorporated is going to rise from $62.00 to $65.00 per share over the next year. You know that the annual return on the S&P 500 has been 10% and the 90-day T-bill rate has been yielding 6% per year over the past 10 years. If beta for Zip is 0.9, will you purchase the stock?
[DOC File]A corporate bond maturing in 5 years carries a 10% coupon ...
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The WACC for the company is 10%. The company’s balance sheet shows $20 million in short-term investments that are unrelated to operations. The balance sheet also shows $50 million in accounts payable, $90 million in notes payable, $30 million in long-term debt, $40 million in preferred stock, and $100 million in total common equity.
[DOC File]Suppose you hold a diversified portfolio consisting of ...
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Suppose you hold a diversified portfolio consisting of $10,000 invested equally in each of 10 different common stocks. The portfolio’s beta is 1.120. Now suppose you decided to sell one of your stocks that has a beta of 1.000 and to use the proceeds to buy a replacement stock with a beta of 1.750.
[DOC File]Chapter 10: Return and Risk: The Capital-Asset-Pricing ...
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If the correlation between the returns on Stock A and Stock B is -0.5, the standard deviation of the portfolio is 10.58%. As Stock A and Stock B become more negatively correlated, the standard deviation of the portfolio decreases. 10.7 a. Value of Macrosoft stock in the portfolio = (100 shares)($80 per share) = $8,000
[DOC File]An investor has a 2-stock portfolio with $50,000 invested ...
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An investor has a 2-stock portfolio with $50,000 invested in Palmer Manufacturing and $50,000 in Nickles Corporation. Palmer’s beta is 1.20 and Nickles’ beta is 1.00. What is the portfolio's beta? (Points : 4) 0.94 1.02 1.10 1.18 1.26. 3.
[DOC File]Chapters 1&2 - Investments, Investment Markets, and ...
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Suppose you invest 10% in stock A and 90% in stock B. What is the expected rate of return of the portfolio? What is the standard deviation of the return of the portfolio? E(rp) = 6.9%, = 73.59, and = 8.58% If you compare stock B with the portfolio, what do you find?
[DOC File]Columbia University in the City of New York
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Suppose you wanted to create a portfolio that consists of stock X and stock Y. Compute the portfolio expected return and portfolio risk for each of the following proportions invested in stock X. .10 .30 .50 .70 .90 On the basis of the results of (g), which portfolio would you recommend? Explain. 21.
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1. Given the following information, calculate the expected return of Portfolio ABC. Expected return of stock A = 10%, Expected return of stock B = 15%, Expected return of stock C = 6%. 40 percent of the portfolio is invested in A, 40 percent is invested in B and 20 percent is invested in C.
[DOC File]Home | University of Pittsburgh
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A typical NYSE stock has a standard deviation of annual returns of 49.24%, while the typical portfolio of 100 or more stocks has a standard deviation just under 20%. Diversifiable risk: The variability present in a typical single security that is not present in a portfolio of securities.
[DOC File]Capital Structure without Taxes - Finance Department
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10.4 A portfolio consists of 120 shares of Atlas stock, which sell for $50 per share, and 150 shares of Babcock stock, which sell for $20 per share. What are the weights of the two stocks in this portfolio? Security F has an expected return of 12 percent and a standard deviation of 9 percent per year.
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