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Homework answers / question archive / The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador, Ltd
The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador, Ltd. are shown below. Chihuahua Labrador Expected Return Standard Deviation of Returns 14% 42% 9% 22% Correlation(Chihuahua, Labrador) = 0.40 You have $10,000 to invest, and are trying to decide how much money to invest in each of the two companies. Calculate the expected return and standard deviations for the following mixtures: a. $7,000 of Chihuahua stock, and $3,000 of Labrador stock b. $5,000 of Chihuahua stock, and $5,000 of Labrador stock c. $2,000 of Chihuahua stock, and $8,000 of Labrador stock
amount of credit depending on how ser get a zero. Wish Industries plans to produce and sell an ornamental lamp. After careful consideration, they have decided that Lanternfish Limited's business operations are comparable in riskiness to the lamp project. You have collected the following information: Lanternfish Limited Current Dividend Beta Debt Bond Ratings Total Assets Current Assets Payout Ratio $3.60 1.20 50 Million AAA 350 Million 40 Million 20% Financial Market Information Risk free interest rate Expected return for S&P 500 Dow Jones Industrial Average Unemployment Rate 3.7% 12.0% 26,400 8.5% Estimate the cost of capital for the ornamental lamp project.
