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- A hedge fund has created a portfolio using just two stocks. It has shorted $25,000,000 worth of Oracle stock and has purchased $75,000,000 of Intel stock. The correlation between Oracle's and Intel's returns is 0.61. The expected returns and standard deviations of the two stocks are given in the following table: a. What is the expected return of the hedge fund's portfolio? b. What is the standard deviation of the hedge fund's portfolio?A hedge fund has created a portfolio using just two stocks. It has shorted $34,000,000 worth of Oracle stock and has purchased $77,000,000 of Intel stock. The correlation between Oracle's and Intel's returns is 0.63. The expected returns and standard deviations of the two stocks are given in the following table below. Suppose the correlation between Intel and Oracle's stock increases, but nothing else changes. Would the portfolio be more or less risky with this change?Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return 0.25 13% 0.25 −7% 0.50 14% 0.25 7% 0.25 18% 0.25 16% 0.25 23% (Click on the icon in order to copy its contents into a spreadsheet.) Question content area bottom Part 1 a. Given the information in the table, the expected rate of return for stock A is enter your response here %. (Round to two decimal places.) Part 2 The standard deviation of stock A is enter your response here %. (Round to two decimal places.) Part 3 b. The expected rate of return for stock B is enter your response here %. (Round to two decimal places.) Part 4 The standard deviation for stock B is enter…
- Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return 0.35 13% 0.25 −7% 0.30 17% 0.25 8% 0.35 21% 0.25 15% 0.25 23% (Click on the icon in order to copy its contents into a spreadsheet.) Question content area bottom Part 1 a. Given the information in the table, the expected rate of return for stock A is enter your response here%. (Round to two decimal places.)A hedge fund has created a portfolio using just two stocks. It has shorted $27,000,000 worth of Oracle stock and has purchased $99,000,000 of Intel stock. The correlation between Oracle's and Intel's returns is 0.69. The expected returns and standard deviations of the two stocks are given in the following table:Suppose the correlation between Intel and Oracle's stock increases, but nothing else changes. Would the portfolio be more or less risky with this change? (Select the best choice below.) O A. More risky. O B. Cannot say without knowing how investors trade off expected return and volatility. O C. Riskiness of the portfolio stays the same. O D. Less risky. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Expected Return Standard Deviation 12.11% 14.42% Oracle Intel 45.45% 38.53% XConsider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return A 8.86 % B C с 11.26 13.18 % Standard Deviation 16 % 16 16 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Beta 0.7 1.2 1.6 X Open spreadsheet a. What is the market risk premium (MRF)? Round your answer to two decimal places. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to…
- Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 11.45% 14% 0.9 B 12.55 14 1.1 C 15.30 14 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 6.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) What is the market risk premium (rM - rRF)? Round your answer to one decimal place. % What is the beta of Fund P? Do not round intermediateConsider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 9.47% 14% 0.7 B 12.44 14 1.3 C 13.92 14 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 6%, and the market is in equilibrium. (That is, required returns equal expected returns.) What is the market risk premium (rM - rRF)? Round your answer to two decimal places. % What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % Would you expect the standard deviation of Fund P to be less than 14%, equal to 14%, or greater than 14%? Less than 14% Greater than 14%…(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.20 0.60 0.20 Probability 0.15 0.35 0.35 0.15 (Click on the icon in order to copy its contents into a spreadsheet.) Common Stock B Return 13% 14% 18% Return - 6% 7% 15% 21% a. Given the information in the table, the expected rate of return for stock A is 14.6 %. (Round to two decimal places.) The standard deviation of stock A is %. (Round to two decimal places.)
- Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock A B с Expected Return 9.34 % 11.26 12.70 % Standard Deviation 16 % 16 16 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. % Beta X Open spreadsheet a. What is the market risk premium (rm - ÖRF)? Round your answer to two decimal places. 0.8 1.2 1.5 b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. I. less than 16% II. greater than 16% III. equal to 16% c. What is the required return of Fund P? Do…Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 6.50% 16% 0.8 B 7.75 16 1.3 C 8.50 16 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 4.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) What is the market risk premium (rM - rRF)? Round your answer to one decimal place. % What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % What would you expect the standard deviation of Fund P to be? Less than 16% Greater than 16% Equal to 16%Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 6.95% 15% 0.7 B C 8.70 10.10 15 15 1.2 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 4.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) a. What is the market risk premium (TM - TRF)? Round your answer to one decimal place. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % d. What would you expect the standard deviation of Fund P to be? 1. Less than 15% II. Greater than 15% III. Equal to 15% -Select- v