1. On January 20, 2010, Fashion Inc. declared a cash dividend of 75 cents per share. On March 18, 2010, Fashion’s stock went ex-dividend (i.e., the ex-dividend date is March 18), and on April 15, 2010 Fashion Inc. will pay the dividend to its shareholders. You bought 100 shares on March 17, 2010. What is the total dividend payment you will receive from Fashion on April 15?
2. Stock A has an expected return of 5% and a standard deviation of 9%. Stock B has an expected return of 8% and a standard deviation of 12%. Stock A and B’s returns are perfectly negatively correlated, i.e., ?A,B = -1. You want to invest $1,000 in a portfolio that consists of Stock A and B, such that your portfolio has zero risk. How much of your money (in dollars) will you invest in Stock B?
Can you explain why the answers are the answers?