Company A State of the economy Probability of occurrence % return given that sta
ID: 2775009 • Letter: C
Question
Company A
State of the economy
Probability of occurrence
% return given that state
Recession
30%
12%
Stable
60%
18%
Boom
10%
25%
Company B
State of the economy
Probability of occurrence
% return given that state
Recession
30%
9%
Stable
60%
14%
Boom
10%
16%
What is the return of X-Corp over the year?
What is the expected return and standard deviation of Company A?
What is the expected return and standard deviation of Company B?
Which Stock provides the best investment based on the risk? Is there a reward tradeoff?
What is the expected return and standard deviation of a portfolio consisting of 40% invested in Stock A and 60% invested in Stock B given a correlation coefficient of .61?
State of the economy
Probability of occurrence
% return given that state
Recession
30%
12%
Stable
60%
18%
Boom
10%
25%
Explanation / Answer
Company A State of the economy Probability of occurrence % return given that sta
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