3. An investor has a stock portfolio. Each stock (listed bel

3. An investor has a stock portfolio. Each stock (listed below) in the portfolio has the following market values and betas.

Stock Market Value Beta
Coca-Cola $8,085 0.89
Cisco Systems $1,900 1.1
AT&T $12,900 0.60
Northrop Grumman $6,000 1.2

What can an investor expect from this portfolio?
a. This portfolio will have higher levels of volatility than the market.
b. The portfolio's unsystematic risk is measured through beta which is 0.84.
c. This portfolio has less systematic risk than the market.
d. This portfolio has less money invested in low beta stocks and more money invested in high beta stocks.

4. A stock has the same level of systematic risk as the market. The stock has an expected return of 14%. The risk free rate is 5%. Calculate the market risk premium.
a. 5%
b. 7%
c. 9%
d. 14%

5. The stocks of Microsoft and Apple have a correlation of 0.6. Microsoft and Apple stock have variances of 30% and 40%. What is their covariance?

A highly risk-averse investor is considering adding one additional stock to a 4-stockportfolio. Two stocks are under consideration. Both have an expected return of 15%. However, the distribution of possible returns associated with Stock A has a standard deviation of 12%, while Stock B's standard deviation is 8%. Both stocks

See attached file.
I know a risk-adverse investor would choose the economy in which stock returns are independent because this risk can be diversified away in large portfolio. I need a bit more explanation in a brief.

An investor is considering a two-asset portfolio.Stock A has an expected return of $4.50 per share with a standard deviation of $1.00, while stock B has an expected return of $3.75 with a standard deviation of $0.75. The covariance between the two stocks is -0.35. Find the portfolio risk if:
a) the stocks are weighted equal

I need assistance in solving the following problem.
An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $25,000 in stock B which has a beta of 0.90. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on

Stocks M and W have the following historical returns:
Year Stock M Stock W
2007 -19% -13.50%
2008 33% 22.75%
2009 16% 34.50%
2010 -0.30% -7.83%
2011 27% 23.30%
a. Calculate the average rate of return for eachstock during the 5-year period.
b. Assume

Suppose you have invested $30,000 in the following four stocks:
Security Amount Invested Beta
Stock A $5,000 0.75
Stock B $10,000 1.1
Stock C $8,000 1.36
Stock D $7,000

Stock A and B have the following historical returns:
YEAR STOCK A'S RETURNS STOCK B'S RETURNS
1998 (18.00%) (14.50%)
1999 33.00% 21.80%
2000 15.00% 30.50%
2001 (0.50%) (7.60%)
2002 27.00% 26.30%
a)Calculate the average rate of return for eachstock during the period 1998 through 2002.
b)Assume that an investor held a

You own a portfolio of two stocks (X and Y), with 40% of the portfolio invested in Stock X. You have observed over many years that the variance of your portfolio value is 0.0144 and that the correlation between the stock X and stock Y is 0.7. If the standard deviation of Stock X is 0.20, what is the standard deviation of the sto

Stocks A and B both have an expected return of 10% and a standard deviation of returns of 25%. Stock A has a beta of 0.8 and Stock B has a beta of 1.2. The correlation coefficient, r, between the two stocks is 0.6. Portfolio P is a portfolio with 50% invested in Stock A and 50% invested in B. Which of the following statements is