Chapter 06: Assignment - An Introduction to Portfolio Management Attempts Average/14 3. Problem 6-05 Problem 6-05 Given: ellook E(R₂) - 0.08 E(R₂) = 0.10 E(0) -0.02 E(0₂) -0.05 Calculate the expected

returns and expected standard deviations of a two-stock portfolio in which Stock 1 has a weight of 40 percent under the conditions given below. Do not round intermediate calculations. Round your answers for the expected returns of a two-stock portfolio to three decimal places and answers for expected standard deviations of a two-stock portfolio to four decimal places. a. 21.00 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: b. 1.-0.60 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: -0.15 Expected return of a two-stock portfolo:[ Expected standard deviation of a two-stock portfolio: d. na -0.00 Expected return of a two-stock portfolio: Chapter 06: Assignment - An Introduction to Portfolio Management a. 1,2 = 1.00 Expected return of a two-stock portfolio: [ Expected standard deviation of a two-stock portfolio: b.1.2-0.60 Expected return of a two-stock portfolio: [ Expected standard deviation of a two-stock portfolio: C.1.2-0.15 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: d. 1.2 - 0.00 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: e. 1.2 -0.15 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio:/n CHAPTER 6 PROBLEM Only 3 chances to get the question correct, Here is first questions Chapter 06: Assignment - An Introduction to Portfolio Management Alempi 1. Problem 6-03 Problem 6-03 eBook Average/O The following are the monthly rates return for Madison Cookies and for Sophie Electric during a -month period. Madison Cookies Sophie Electric 1 -0.02 2 0.06 3 -0.09 4 0.13 5 -0.02 6 0.03 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. a. Average monthly rate of return R, for each stock. Madison Cookies: Sophie Electric: b. Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: c. Covariance between the rates of return. d. The correlation coefficient between the rates of return. Would these two stocks be good choices for diversification? Why or why not? Month Chapter 06: Assignment - An Introduction to Portfolio Management THC TOROWing are the momenty races of recar for madison COORICS and for Supric ciccerie daring a six monun perioa. Sophie Electric: b. Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: c. Covariance between the rates of return. d. The correlation coefficient between the rates of return. -0.02 0.06 -0.09 0.13 5 -0.02 6 0.03 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. a. Average monthly rate of return R; for each stock. Madison Cookies: Month good bad 0.06 -0.01 -0.08 0.16 -0.06 0.01 1 2 3 4 Madison Cookies Sophie Electric 0.06 -0.01 -0.08 0.16 -0.06 0.01 Would these two stocks be good choices for diversification? Why or why not? Madison Cookies and Sophie Electric are -Select- choices for diversification as these assets have -Select- -Select- ✓ correlation. Chapter 06: Assignment - An Introduction to Portfolio Management The Tonowing are the money rates of retam for madison COURICS and for Suphic Electric during a six monun penou. 1 -0.02 0.06 2 3 -0.09 4 0.13 -0.02 5 6 0.03 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. EA a. Average monthly rate of return R; for each stock. Madison Cookies: Sophie Electric: b. Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: c. Covariance between the rates of return. Chapter 06: Assignment - An Introduction to Portfolio Management Attempts Average / 5 d. The correlation coefficient between the rates of return. 2. Problem 6-04 A. Problem 6-04 26 24 22 20 18 16 14 Would these two stocks be good choices for diversification? Why or why not? Madison Cookies and Sophie Electric are -Select- ✓ choices for diversification as these assets have -Select- -Select- high positive high negative low positive low negative Standard deviation of two portfolios if r1,2 = 0.50: Standard deviation of two portfolios if r1,2 = -0.65: Choose the correct risk-return graph. The correct graph is -Select- ✓ eBook Month Expected Return, % Madison Cookies Sophie Electric B You are considering two assets with the following characteristics. E(R₁) = 0.16 E(01) = 0.07 W₁ = 0.5 E(R₂) = 0.20 E(02) = 0.18 W₂ = 0.5 Compute the mean and standard deviation of two portfolios if r1,2 = 0.50 and -0.65, respectively. Do not round intermediate calculations. Round your answers for the mean of two portfolios to three decimal places and answers for standard deviations of two portfolios to five decimal places. Mean of two portfolios: 0.06 -0.01 -0.08 0.16 -0.06 0.01 ✓correlation. Chapter 06: Assignment - An Introduction to Portfolio Management three dcemmer places and answer TOT SLUTTour device or the purcromos co me common proces. Mean of two portfolios: Standard deviation of two portfolios if r1,2 = 0.50: Standard deviation of two portfolios if r1,2 = -0.65: Choose the correct risk-return graph. The correct graph is-Select- ✓ -Select- A. Expected Retur graph B graph A graph C graph D $26 22229 24 20 18 16 14 12 $10 8 6 4 2 N B. B A: 12 26 24 22 20 18 16 14 F12 10 8 =0.50 N A 10 12 14 16 18 Risk (Standard deviation),% Expected Return. % A: r B: r = 0.65 1.2 A: r 1.2=0.50 B 1.2=0.50 8 10 12 14 16 18 Risk (Standard deviation),% B: A 1.2= 10 12 14 16 18 (Standard deviation),% Risk B: r 1.2 0.65 == 0.65 C. 26 24 22 20 10 16 14 12 10 8 1 A: 1.2=0.50 Expected Return, % A: r A 1.2=0.50 B: B 1.2= 0.65 10 12 14 16 18 Risk (Standard deviation), B: r =- 0.65 1.2