sfm nov 17 que 6(a)

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what was the weight of security in that portfolio????? what was the answer?
Replies (6)

in a situation where weights are not given means they are equally weighted. half half. we have to assume weight as 0.50 and 0.50.

so answer is:

take total of returns devide it by 5 (total number of years) = you will get average return for 1 security. do it for 2nd security also. 

Return of portfolio = ( Weight 1 * average return of Security 1 ) + (weight 2 * average return of security 2)

weight = 0.50 for each. 

 

Risk:

Using (X - X!) approach, deduct each year return from average return then square it. 

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i did till this stage, i could not recall the formula to use without correlation. ?

i think this might be the way to solve that problem. dont know whether it is right or wrong. how you solved? anyone else?

same way...i assumed equal weights in absence of information...i think this question was one of the ambiguous questions which lacks information

yeah right. the most ambigious question. 

anyone know about the que 4 a ?
we can actually find the weights by using formula and then find portfolio risk and return..
about 6 a i thinks weights were 50-50


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