[rpsheppard]

Could Someone please solve the following exam question in relation to the Beta & Correlation of stocks? I'm totally lost and against a tight schedule so I don't even have time to spend on researching the categories!

Your stock broker has provided the following historical information on the stocks of two companies: Icarus Ltd and Taurus Co. The variance of Icarus’ returns is 7.8%, while the variance of Taurus’ returns is 3.5%. Expected return on Icarus is 12% and expected return on Taurus is 9%. The correlation coefficient between the two stocks’ returns is 0.36. The correlation between Icarus and the market is 0.60, while the correlation between Taurus and the market is 0.70. In addition, you know that the variance of the market index is 1.2%.

(I) Calculate the betas of Icarus and Taurus; (10 marks)
(ii) Compute the variance of the portfolio consisting of 70% of Icarus and 30% of Taurus; (10 marks)
(iii) Calculate the expected return of the above portfolio; (10 marks)
(iv) Calculate the beta of the investment evenly split between Icarus stocks, Taurus stocks, market portfolio, and a risk-free asset. (15 marks)

[morgaine300]

You want someone to solve your EXAM for you? I don't think so. We have rules against solving people's homework for them, let alone an exam!

An exam is to test your knowledge and see if you learned what you were supposed to. Asking someone else to do it is unethical, immoral - and your tight schedule is your responsibility, not ours. Why on earth should I take up my time doing your work - I already went to school and did my own work, thanks.

I just love this generation of non-responsibility.

[Clough]

Hi, rpsheppard!

Also, if you were employed somewhere where you actually needed to make use of the knowledge as to how to answer that sort of question correctly as part of being competent in doing what you're paid to do, what good would it do you for someone to provide you the answer rather than you knowing how to answer it on your own, please?

Thanks!