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Author Question: Consider the following information for three stocks, A, B, and C, and portfolios of these stocks. ... (Read 52 times)

xsk4r3kr0w

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on: Aug 7, 2023
Consider the following information for three stocks, A, B, and C, and portfolios of these stocks. The stocks’ returns are positively but not perfectly positively correlated with one another, i.e., the correlation coefficients are all between 0 and 1.
        
   

Expected

 

Standard

  
 

Stock

 

Return

 

Deviation

 

Beta

 Stock A 10% 30% 

1.0

 Stock B 10 20 

1.0

 Stock C 14 14 

1.6

        

Portfolio AB has half of its funds invested in Stock A and half in Stock B. Portfolio ABC 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, so required returns equal expected returns. Which of the following statements is correct?


◦

Portfolio AB has a standard deviation of 30%.


◦

Portfolio AB’s coefficient of variation is greater than 3.0.


◦

Portfolio AB’s required return is equal to the required return on Stock A.


◦

Portfolio ABC’s expected return is 12%.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by xsk4r3kr0w on Aug 7, 2023

queenBea90

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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xsk4r3kr0w

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Reply 2 on: Aug 7, 2023
:D TYSM

laurnthompson

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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