Ethan Lewis Finan202[10884].docx - Lewis Ethan WMS Assignment Cover Sheet Family Name Lewis Student ID Number 1344923 Paper Code FINAN202-19B Tutorial 2

# Ethan Lewis Finan202[10884].docx - Lewis Ethan WMS...

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Lewis, Ethan WMS Assignment Cover Sheet Family Name: Lewis First Name: Ethan Student ID Number: 1344923 Paper Code: FINAN202-19B Tutorial: 2 pm - 3 pm, Tuesday, MSB 0.26 Assignment Name: Individual Assignment 1 Due Date: September 6, 2019. Please fill in the above information and then save this page as the first page of your assignment to be submitted. If you are submitting this on behalf of a Group please ensure you note all group member names and student ID numbers on this form below:

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Lewis, Ethan Question 1 a) If returns on two stocks are highly correlated it can be represented by the correlation coefficient formula which gives a number from -1 to +1. A highly correlated stock would have a coefficient of +1 meaning if stock A prices rise then stock B would follow. If there is no correlation the coefficient would be 0 and -1 (negative) which means the relationship between the stocks are opposite 100% of the time. b) An efficient portfolio can be looked at when it comes to the efficient frontier which graphs the set of portfolios that offer the greatest return for the defined risk. There are two ways to produce the frontier. Maximize the expected return for any level of SD or is minimizing the SD for any level of expected return. A simple way of putting it is highest return for its level
• Fall '19
• Modern portfolio theory, Ethan

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