An exhaustive financial analysis has produced the following returns on two inves

Question

An exhaustive financial analysis has produced the following returns on two investments under three different scenarios: Expected Returns Scenario Probability Stock X Stock Y S1 0.3 10% 8% S2 0.4 16% 15% S3 0.3 12% 20% (a) Calculate the expected return on each investment. (b) Calculate the standard deviations (?) for both X and Y. (c) Calculate the coefficient of variation (CV) for both X and Y. (d) If you were to create a portfolio consisting of 67% of Stock X and 33% of Stock Y, what will be the expected return (rP) and the standard deviation (?P) for your portfolio?

Explanation / Answer

Expected Return = (.0.3)(.10) + ( 0.4 )(.16) + (0.4)(.12) = 0.03 +0.064+0.036 = 0.13%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.