# Finance

Ra Rb
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 through 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.

1. 👍
2. 👎
3. 👁

## Similar Questions

1. ### math 156

A man earned \$3000 the first year he worked. if he received a raise of \$400 at the end of each year, what was his salary during his 15th year? would it be \$9000

2. ### c++ programming

Write a program that determines the day number (1 to 366) in a year for a date that is provided as input data. As an example, January 1, 2011 is day 1. December 31, 2010 is a day 365. December 31, 2012 is day 366, since 2012 is a

3. ### Calculus

A tree grows 2.80 m during the first year since it was planted. During each subsequent year the tree's growth is 85% of its growth the previous year. a) Calculate to the nearest 0.001m, the growth of the tree in the fourth year.

4. ### econ

If the Consumer Price Index was 110 in one year and 117 in the next year, the rate of inflation from one year to the next was a)3.5% b)4.7% c)6.4% d)7.1%

1. ### macroeconomics

23. The next four questions refer to the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Units of Price Year output per unit 1 16 \$2 2 20 3 3

2. ### Finance

A job pays a salary of 35,000 the first year. During the next 10 years, the salary increases by 4% each year. What is the salary for the 11th year? What is the total salary over the 11 year period? (Round to the nearest cent.)

3. ### algebra

The linear equation y=0.15x+0.79 represents an estimate of the average cost of gas for year x starting in 1997. the year 1997 would be represented by x=1, for example, as it is the first year in the study. similarly, 2005 would be

4. ### macroeconomics

25. The following table shows the price of a specific stereo receiver for a five-year period. Using Year 1 as the base year, calculate the price index for each year. Year Price Price index (answers using Year 1 = 100) 1 \$112 ___ 2

1. ### math 156

a worker makes 30000 a year. after 1 year he gets a raise of 5%. the next year he gets a raise of 10%. If he received no raise the first year, what percent increase would give him the same salary as consecutive raises of 5% and

2. ### Ecomonics(Urgent,please respond)

The table below shows the market basket quantities and prices for the base year (year 1) Base year 1 Price in price Quantity base year yr 2 Product Pizza 15 \$3 \$3.75 t-shirts 4 \$10 \$9 rent 1 \$500 \$550 In year 1 the CPI was? In

3. ### MATH

The value V of a machine t years after it is purchased is inversely proportional to the square root of t+2. The initial value of the machine is \$10,000. Find the rate of depreciation when t=5 . Round your answer to two decimal

4. ### Math

The table below shows the number of deaths in the U.S. in a year due to a variety of causes. For these questions, assume these values are not changing from year to year, and that the population of the United States is 312 million