Question

Use the following information to answer the two questions below.

State of Prob. of the Rate of return if state occurs

the economy state of economy Stock A Stock B

Boom 0.40 0.12 0.04

Bust 0.60 0.02 0.04

**You MUST use 4 digits in every calculation you do in
order for your answer to be the same as the one in the system.
Enter answer using 4 decimals. Do not use or enter the %. For
example, if your answer is 3.48% enter 0.035; if your answer is
0.12013 then enter 0.1201**

What is the expected return of a portfolio with 30% in asset A and 70% in Asset B?

What is the variance of the portfolio with 30% in asset A and 70% in Asset B?

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Answer #1

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.20
0.19
0.46
0.32
Good
0.40
0.12
0.19
0.14
Poor
0.10
0.04
–0.09
–0.05
Bust
0.30
–0.04
–0.30
–0.09
a. Your portfolio is invested 20 percent each
in A and C and 60 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.25
0.18
0.32
0.25
Good
0.20
0.12
0.22
0.09
Poor
0.40
–0.03
–0.11
–0.02
Bust
0.15
–0.11
–0.16
–0.10
a. Your portfolio is invested 30 percent each
in A and C and 40 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.25
0.23
0.39
0.26
Good
0.15
0.12
0.15
0.16
Poor
0.30
–0.02
–0.12
–0.03
Bust
0.30
–0.18
–0.18
–0.11
a. Your portfolio is invested 35 percent each
in A and C and 30 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

consider the following information:
state of economy. probability of
state of economy
boom.
0.58
bust.
0.42
rate of return if state occurs
stock A. stock
B.
stock C
0.14.
0.22.
0.40
0.14.
0.02.
- 0.09
a: what is the expected return on an equally weighted
portfolio of these three stocks?
b: what is the variance of a portfolio invested 25% each in A and B
and 50% in C?

Consider the following information: Rate of Return if State
Occurs State of Economy Probability of State of Economy Stock A
Stock B Stock C Boom 0.30 0.23 0.31 0.30 Good 0.15 0.16 0.11 0.12
Poor 0.30 0.02 –0.08 –0.07 Bust 0.25 –0.22 –0.24 –0.13 a. Your
portfolio is invested 25 percent each in A and C and 50 percent in
B. What is the expected return of the portfolio? (Do not round
intermediate calculations. Enter your answer as a percent...

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.25
0.18
0.37
0.27
Good
0.15
0.13
0.14
0.15
Poor
0.40
–0.01
–0.11
–0.04
Bust
0.20
–0.19
–0.16
–0.13
a. Your portfolio is invested 40 percent each
in A and C and 20 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Security Returns if State Occurs
State of Economy
Probability of State of Economy
Roll
Ross
Bust
0.40
−16
%
17
%
Boom
0.60
16
7
Calculate the expected return on a portfolio of 65 percent Roll
and 35 percent Ross by filling in the following table:(A
negative value should be indicated by a minus sign. Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places.)
State of Economy
Probability of State of Economy
Portfolio...

Consider the following information on Stocks A, B, C and their
returns (in decimals) in each state:
State
Prob. of State
A
B
C
Boom
20%
0.26
0.18
0.17
Good
45%
0.12
0.08
0.09
Poor
25%
0.04
0.02
0.03
Bust
10%
-0.1
-0.04
-0.01
If your portfolio is invested 25% in A, 40% in B, and 35% in C,
what is the standard deviation of the portfolio in percent?

Consider the following information:
Rate of Return if State Occurs
State of Economy
Probability of State of Economy
Stock A
Stock B
Stock C
Boom
0.20
0.20
0.33
0.29
Good
0.30
0.15
0.12
0.13
Poor
0.20
0.01
–0.09
–0.06
Bust
0.30
–0.21
–0.26
–0.13
a. Your portfolio is invested 30 percent each
in A and C and 40 percent in B. What is the expected return of the
portfolio? (Do not round intermediate calculations. Enter
your answer as a percent...

Given the following information about the returns of stocks A,
B, and C, what is the expected return of a portfolio invested 30%
in stock A, 40% in stock B, and 30% in stock C? Enter answer in
percents
State of Economy Probability Stock A Stock B Stock C
Boom 0.19 0.36 0.24 0.37
Good 0.22 0.21 0.12 0.24
Poor 0.28 0.06 0 0.02
Bust -- -0.1 -0.27 -0.25

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