Purchase Solution

Analysis of Risk and Return

Not what you're looking for?

Ask Custom Question

6. You have the following information on two securities in which you have invested:
EXPECTED STANDARD PERCENT
Security Return Deviation BETA INVESTED(w)
Xerox 15% 4.5% 1.20 35%
Kodak 12% 3.8% 0.98 65%
A) Which stock is riskier in a portfolio context? Which stock is riskier if you are considering them as individual assets (not part of a portfolio)?
B) Compute the expected return on the portfolio.
C) If the securities have a correlation of +0.60, compute the standard deviation of the portfolio.
D) Compute the beta of the portfolio.

Purchase this Solution
Solution Summary

The solution examines the analysis of risk and return. The beta of the portfolio is determined.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
Recent Feedback
  • "I've posted a similar question for another course. It's post 657940, and it's a practice problem that I'd like to use for the final exam. Your help will be greatly appreciated. "
  • "thank you!"
  • "Thank you again Jayant. You are super fast. "
  • "Thank you Jayant. You are appreciated. "
  • "Again, thank you Jayant. You are wonderful. "
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Financial Management

    178358 Finance questions: financial statement analysis, efficient markets, risk and return What are some different types of analysis that may be performed when undertaking financial statement analysis?

  • Impact of risk for investments

    235736 Impact of risk for investments How would we adjust our present value analysis of an investment for the risk environment they operate in? How would risk impact the return required of an investor?

  • Risk Analysis and Profile

    442036 Risk Analysis and Profile You believe Dr. Washington is now ready to begin risk analysis and is ready to understand the types of risk associated with different investment vehicles.

  • A risk adverse company will increase or decrease its return on investment?

    it also discusses company attitudes towards risk by classifying companies in terms of risk, and then discussing the types of investment that match the level of risk.

  • Finance Questions : Risk and Return, Rate of Return and Scenario Analysis

    56371 Finance Questions : Risk and Return, Rate of Return and Scenario Analysis Risk and Return. True or false? Explain or qualify as necessary. a.

  • Project Analysis Based On Risk

    Which of the following independent projects should the company accept? Project A has below-average risk and a return of 6.5 percent. Project B has above-average risk and a return of 9 percent. Project C has average risk and a return of 7 percent.

  • Accounting Risk in Capital Budgeting

    The financial manager selecting one of two projects of differing risk should select the project with the: A) largest risk-adjusted net present value. B) least relative risk. C) greatest return even if that project has greater risk.

  • Finance questions

    The solution explains various problems in finance relating to risk preferences; risk analysis; portfolio analysis and basic sensitivity analysis

  • Risk Version and Interest Rate Risk

    In our analysis, Beta does not change because it is an indication of the systematic risk (Risk that cannot be diversified), and the risk free rate of return does not change because risk is not involved in our analysis.

  • Risk Return Analysis of a Stock and a Bond

    Investment Portfolio Project: Risk/Return analysis In preparation for your Risk/Return Analysis, complete the following activities: a.

View More Related Solutions