Expected Return Volatility Johnson Johnson 179 216 6 Calculate a

Expected return volatility johnson johnson 179 216 6

This preview shows page 2 - 3 out of 3 pages.

Expected Return Volatility Johnson & Johnson Walgreen 6.9% 9.6% 17.9% 21.6% 6. Calculate (a) the expected return and (b) the volatility (standard deviation) of a portfolio that is equally invested in Johnson & Johnson’s and Walgreen’s stock. 7. For the portfolio in Problem 6 , if the correlation between Johnson & Johnson’s and Wa lgreen’s stock were to increase, a. Would the expected return of the portfolio rise or fall? b. Would the volatility of the portfolio rise or fall? 8. Calculate (a) the expected return and (b) the volatility (standard deviation) of a portfolio that consists of a long position of $8,500 in Johnson & Johnson and a short position of $1,5 00 in Walgreen’s. 9. Using the same data as for Problem 6, calculate the expected return and the volatility (standard deviation) of a portfolio consisting of Johnson & Johnson’s and Walgreen’s stocks using a wide range of portfolio weights. Plot the expected return as a function of the portfolio volatility. Using your graph, identify the range of Johnson & Johnson’s portfolio weights that yield efficient combinations o f the two stocks, rounded to the nearest percentage point.
Image of page 2

Subscribe to view the full document.

Image of page 3
  • Three '19

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

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes