Question

You are expecting either a recession or steady growth next year. Recession has a 19% probability...

You are expecting either a recession or steady growth next year. Recession has a 19% probability of happening. In steady growth, stock ABC returns 12.75% and stock XYZ returns 9.75%. In a recession, stock ABC returns -6.50% and stock XYZ returns -4.30%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 61% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are expecting either a recession or steady growth next year. Recession has a 43% probability...
You are expecting either a recession or steady growth next year. Recession has a 43% probability of happening. In steady growth, stock ABC returns 9.75% and stock XYZ returns 6.75%. In a recession, stock ABC returns -5.30% and stock XYZ returns -3.10%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 37% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
You are expecting either a recession or steady growth next year. Recession has a 41% probability...
You are expecting either a recession or steady growth next year. Recession has a 41% probability of happening. In steady growth, stock ABC returns 10.00% and stock XYZ returns 7.00%. In a recession, stock ABC returns -5.40% and stock XYZ returns -3.20%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 39% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
You are expecting either a recession or steady growth next year. Recession has a 11% probability...
You are expecting either a recession or steady growth next year. Recession has a 11% probability of happening. In steady growth, stock ABC returns 13.75% and stock XYZ returns 10.75%. In a recession, stock ABC returns -6.90% and stock XYZ returns -4.70%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 69% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
You are expecting either a recession or steady growth next year. Recession has a 29% probability...
You are expecting either a recession or steady growth next year. Recession has a 29% probability of happening. In steady growth, stock ABC returns 11.50% and stock XYZ returns 8.50%. In a recession, stock ABC returns -6.00% and stock XYZ returns -3.80%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 51% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a boom state is 0.2, a normal state is 0.5, and a recession state is 0.3. And there are three stocks in this economy, called Alpha, Beta, and Gamma respectively. The return performance of these stocks has been summarized by the following table: Alpha Beta Gamma boom 15% 28% 1% normal 6% 12% 3% recession -12% -30% 20% (Please show your intermediate processes, instead of...
19. The year is 2006. You are the manager of a university endowment and are combining...
19. The year is 2006. You are the manager of a university endowment and are combining stocks, bonds, and real estate funds. Your mandate is to find the optimal portfolio that has an expected return of 8% per year. What optimization problem would you try to solve? Minimize risk for an expected portfolio return of 8% per year Maximize expected return for a volatility target of 8% per year None of these Maximize the Sharpe ratio with no constraints Not...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT