Saturday

April 19, 2014

April 19, 2014

Posted by **Mitchell** on Wednesday, June 20, 2007 at 10:37pm.

Year 03 40% -30%

Year 04 -24% 22

Year 05 30 42

year 06 26 46

Corrleation coefficinet= -.2374

Construct a portfolio P that contains A and B in proportions of 40% in A and 60% in B and calculate the returns on the portfolio for each of the years 03 thru 06.

I have no clue how to start this.... Please help.

Question: does the portfolio manager re-adjust the portfolio every year to maintain a 40/60 split.

For now, I will assume no, and assume that gains and losses are compounded.

An Excel spreadsheet is very useful for these types of operation. Assume that the initial P=100 and that in year 02 $40 is invested in A and $60 in B. In 03 A grows to 1.40*(40)=56 and B declines to .70*(60)=42.

In 04, A declines to .76*56=42.56 and B grows to 1.22*42=51.24.

Take it from here.

**Related Questions**

Finance - Need help finding a formula for: Question: Suppose a bank offers you ...

5th grade math urgent - Okay look: 00-01-$7586 01-02-$8022 02-03-$8502 03-04-$...

Finance - A firm has debt with a market value of $40 million and an equity value...

math - A town has a population of 32,000 in the year 2002; 35,200 in the year ...

finance - Suppose that you are 25 years old and you have two options to save ...

macroeconomics - 23. The next four questions refer to the following price and ...

finance - What is the net present value of a project that has an upfront cash ...

finance - Thompson stores is considering a project that has the following cash ...

Pre-calc - An investment firm has a job opening with a salary o $30,000 for the ...

Engineering Econonmy - You decide to open an IRS-approved retirement account at ...