The answer is yes marsha whats the question john you

  • No School
  • AA 1
  • 5

This preview shows page 4 - 5 out of 5 pages.

John: I've got it! The answer is yes! Marsha: What's the question? John: You asked me to marry you. The answer is yes. Where should we go on our honeymoon? Marsha: How about Australia? I'd love to visit the Sydney Futures Exchange. QUESTIONS 1. Table 8.4 reproduces John's notes on Pioneer Gypsum and Global Mining. Calculate the expected return, risk premium, and standard deviation of a portfolio invested partly in the market and partly in Pioneer. (You can calculate the necessary inputs from the betas and standard deviations given in the table. Hint: A stock's beta equals its covariance with the market return divided by the variance of the market return.) Does adding Pioneer to the market benchmark improve the Sharpe ratio? How much should John invest in Pioneer and how much in the market? Table 8.4 John's notes on Pioneer Gypsum and Global Mining. Pioneer Gypsum Global Mining Expected return 11.0% 12.9% Standard deviation 32% 24% Beta 0.65 1.22 Stock price $87.50 $105.00 2. Repeat the analysis for Global Mining. What should John do in this case? Assume that Global accounts for .75% of the S&P index.
Image of page 4
Image of page 5

You've reached the end of your free preview.

Want to read all 5 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors