Suppose that two stocks a and b and the market portfolio m, Finance Basics

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Suppose that two stocks a and b and the market portfolio m

Suppose that two stocks, A and B, and the market portfolio, M, have the following characteristics: Corr(A,M) = 0.8; Corr(B,M) = 0.6; ?2M = 0.1225; ?2A = 0.0784 and ?2B = 0.090. The total value of the portfolio is $2,000 of which 2/3 is invested in Stock B. [Note: Corr ( ) = Correlation coefficient]

A. Find the beta of the portfolio formed of A and B. Please show work
B. Find the amount of Stock B's diversifiable risk. Please show work

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Finance Basics: Suppose that two stocks a and b and the market portfolio m

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Finance Basics: Suppose that two stocks a and b and the market portfolio m

Reference No:- TGS0632513

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

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Finance Basics: Suppose that two stocks a and b and the market portfolio m

Reference No:- TGS0632513

Recent Questions Asked Finance Basics

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