Calculate the standard deviation of a two-stock portfolio.

Let X and Y be two stocks with the following features: - Stock X Expected Return 14% - Stock Y Expected Return 18% - Stock X Standard Deviation 40% - Stock Y Standard Deviation 54% - Correlation(X,Y) = .25 - Mean is 15.6% What is the standard deviation for a portfolio with 60% in stock x and 40% invested in stock Y?

8 Finance Quetsions

1. Interest rates on 1-year Treasury securities are currently 5.6 percent, while 2-year treasury securities are yielding 6 percent. If the pure expectations theory is correct, what does the market believe will be the yield on 1- year securities 1 year from now? 2. Assume that at the beginning of 1981 the expected inflation rate for 1981 was 13%, for 1982 9%, for 1983 7%, and for 1984 and thereafter 6%. a)What was the average expected inflation rate over the 5 year period 1981-1985? (use arithmetic average) b)What average nominal interest rate would, over the 5 year period be expected to produce a 2% real risk free rate of return on 5year treasury securities 3. What is the percent... click for more

1) Rate of return, growth rate, return on new investments on stocks. 2) Coupon rate, current yield, and yield of maturity of a bond 3) Coupon rate on a bond so that it sells at par

Please see the attachments. 1) Eastern Electric currently pays a dividend of about $1.64 per share and sells for $27 a share. a. If investors believe the growth rate of dividends is 3 percent per year, what rate of return do they expect to earn on the stock? b. If the investors' required rate of return is 10 percent, what must be the growth rate they expect of the firm? c. If the sustainable growth rate is 5 percent, and the plowback ratio is .4, what must be the rate of return earned by the firm on its new investments? 2) Bond Pricing. A 6-year Circular File bond pays interest of $80 annually and sells for $950. What is its coupon rate, current yield, and yiel... click for more

Net Present Value - Sleep-Easily Ltd

Net Present Value - See the attached file. Sleep-Easily Ltd manufactures high quality, branded orthopaedic furniture in Manchester. The products are made in limited numbers and for limited production periods of usually no more than six years. All products are sold on the Web, supported by speciality magazine advertising. A significant part of the overhead is concerned with the costs of promotion and is shared between up to 70 product items at any one time. The directors are currently reviewing a number of new product proposals: A) Recliner chair B) Footstool C) Armchair D) Small armchair (special lumbar support) E) Three-seater sofa The following information concerning costs and... click for more

Rate of interest on gold loan vs rate of interest on cash loan

A bank offers a corporate client a choice between borrowing cash at 11% per annum and borrowing gold at 2% per annum. (If gold is borrowed, interest must be repaid in gold. Thus, 100 ounces borrowed today would require 102 ounces to be repaid in one years time.) The risk-free interest rate is 9.25% per annum and storage costs are 0.5% per annum. The interest rates on the two loans are expressed with annual compounding. The risk-free interest rate and storage costs are expresses with continuous compounding. Discuss whether the rate of interest on the gold loan is too high or too low in relation to the rate of interest on the cash loan.