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Two Finance Problems

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Question;Suppose that the Treasury bill rate is 5% rather than 3%. Assume that the expected return on the market stays at 12%. Use the following information.Stock Beta (?)Dow Chemical 2.22Bank of America 2.15Ford 1.65Exxon Mobil 1.64Starbucks 1.70IBM 1.20Newmont Mining 0.95Pfizer 0.87Walmart 0.90Heinz 0.54a. Calculate the expected return from Pfizer. (Do not round intermediate calculations. Round your answer to 2 decimal places.)Expected return %b. Find the highest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Round your answer to 2 decimal places.)Highest expected return %c. Find the lowest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Round your answer to 2 decimal places.)Lowest expected return %______________Hyacinth Macaw invests 54% of her funds in stock I and the balance in stock J. The standard deviation of returns on I is 15%, and on J it is 28%.a. Calculate the variance of portfolio returns, assuming the correlation between the returns is 1.0. (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.)Portfolio variance b. Calculate the variance of portfolio returns, assuming the correlation is 0.4. (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.)Portfolio variance c. Calculate the variance of portfolio returns, assuming the correlation is 0. (Do not round intermediate calculations. Enter your answer as a decimal rounded to 4 places.)

 

Paper#48872 | Written in 18-Jul-2015

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