QUESTION 1 Use the following table of states of the economy and stock returns to
ID: 2713352 • Letter: Q
Question
QUESTION 1
Use the following table of states of the economy and stock returns to calculate the percentage standard deviation of a portfolio of a portfolio of 80 percent Roten and the rest in Bradley.
Security
if State
Returns
Occurs
Prob of State of Economy
Roten
Bradley
Bust
0.2
-12%
30%
Boom
?
37
5
QUESTION 2
Use the following information to calculate the percentage expected return a portfolio that is 39.7 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:
3 Dorrs, Inc.
Down Co.
Expected return
23%
13%
Standard deviation
39
9
Correlation
88
QUESTION 3
Use the following information to calculate the percentage standard deviation of a portfolio that is 72.5 percent invested in 3 Doors, Inc., and the rest invested in Down Co.:
3 Dorrs, Inc.
Down Co.
Expected return
16%
9%
Standard deviation
50
32
Correlation
0.35
Security
if State
Returns
Occurs
Prob of State of Economy
Roten
Bradley
Bust
0.2
-12%
30%
Boom
?
37
5
Explanation / Answer
2)
3)
Std deviation of a porfolio Security Returns if State Occurs Roten Bradely Prob of State of Economy Roten Bradley Expected return Expected return Bust 0.2 -12% 30% -2% 6% Boom 0.8 37% 5% 30% 4% 27% 10% weighted average return of the portfolio= 23.60% (27%*0.8)+(10%*0.2)Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.