Business, 19.03.2021 16:00 alexsince4835

The standard deviation of the market-index portfolio is 35%. Stock A has a beta of 1.40 and a residual standard deviation of 45%. a-1. Calculate the total variance of stock A if its beta is increased by 0.20?
a-2. Calculate the total variance of stock A if its residual standard deviation is increased by 7.54%?
b. An investor who currently holds the market-index portfolio decides to reduce the portfolio allocation to the market index to 90% and to invest 10% in stock A. Which of the following changes (an increase of 0.20 in beta or increase of 7.54% in residual standard deviation) will have a greater impact on the portfolio's standard deviation?
i. Both will have the same impact.
ii. Increase of .20 in beta will have a greater impact.
iii. Increase of 7.54% in the residual standard deviation will have a greater impact.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 00:50

Consider each of the following cases: case accounting break-even unit price unit variable cost fixed costs depreciation 1 127,400 $ 38 $ 25 $ 711,000 ? 2 124,000 ? 41 2,500,000 $ 900,000 3 5,753 117 ? 171,000 100,000 required: (a) find the depreciation for case 1. (do not round your intermediate calculations.) (b) find the unit price for case 2. (do not round your intermediate calculations.) (c) find the unit variable cost for case 3. (do not round your intermediate calculations.)

Answers: 2

Answer

Business, 22.06.2019 12:30

Acorporation a. can use different depreciation methods for tax and financial reporting purposes b. must use the straight - line depreciation method for tax purposes and double declining depreciation method financial reporting purposes c. must use different depreciation method for tax purposes, but strictly mandated depreciation methods for financial reporting purposes d. can use straight- line depreciation method for tax purposes and macrs depreciation method financial reporting purposes

Answers: 2

Answer

Business, 22.06.2019 14:40

You are purchasing a bond that currently sold for $985.63. it has the time-to-maturity of 10 years and a coupon rate of 6%, paid semi-annually. the bond can be called for $1,020 in 3 years. what is the yield to maturity of this bond?

Answers: 2

Answer

Business, 22.06.2019 15:00

(a) what do you think will happen if the price of non-gm crops continues to rise? why? (b) what will happen if the price of non-gm food drops? why?

Answers: 2

Answer

You know the right answer?

The standard deviation of the market-index portfolio is 35%. Stock A has a beta of 1.40 and a residu...

Questions