Question

There is a 15 percent probability the economy will boom; otherwise, it will be normal. Stock...

There is a 15 percent probability the economy will boom; otherwise, it will be normal. Stock G should return 15 percent in a boom and 8 percent in a normal economy. Stock H should return 9 percent in a boom and 6 percent otherwise. What is the variance of a portfolio consisting of $3,500 in Stock G and $6,500 in Stock H?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
There is a 20 percent probability the economy will boom; a 20 percent probability of a...
There is a 20 percent probability the economy will boom; a 20 percent probability of a recesion and otherwise, it will be normal. The Smith Company stock is expected to return 12 percent in a boom, 8 percent in a normal economy and -3 percent in a recession. The Johnson Company stock is expected to return 15 percent in a boom, 4 percent in a normal economy and -3 percent otherwise. What is the standard deviation of a portfolio that...
The probability the economy will boom is 10 percent while the probability of a recession is...
The probability the economy will boom is 10 percent while the probability of a recession is 20 percent. Stock A is expected to return 15 percent in a boom, 9 percent in a normal economy, and lose 14 percent in a recession. Stock B should return 10 percent in a boom, 6 percent in a normal economy, and 2 percent in a recession. Stock C is expected to return 5 percent in a boom, 7 percent in a normal economy,...
. Stock S is expected to return 12 percent in a boom and 6 percent in...
. Stock S is expected to return 12 percent in a boom and 6 percent in a normal economy. Stock T is expected to return 20 percent in a boom and 4 percent in a normal economy. There is a probability of 40 percent that the economy will boom; otherwise, it will be normal. What is the portfolio variance and standard deviation if 30 percent of the portfolio is invested in Stock S and 70 percent is invested in Stock...
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...
During a normal economy, an investment in common stock of D&F Oil provides 15 percent per...
During a normal economy, an investment in common stock of D&F Oil provides 15 percent per annum rate of return. During a recession, the rate of return is negative 12 percent and during a boom, the rate of return is 35 percent. The probability of a normal economy is 80 percent while the probability of a recession is 8 percent and the probability of a boom is 12 percent. What is the expected return for Millennial Lithium Inc.? What is...
Leftover stock is expected to return 26 percent in a boom, 4 percentin a normal economy,...
Leftover stock is expected to return 26 percent in a boom, 4 percentin a normal economy, and lose 25 percent in a recession. The probabilities of a boom, normal economy, and a recession are 2 percent, 93 percent, and 5 percent, respectively. What is the expected return on this stock? a.3.99 percent b. 2.99 percent c. 1.99 percent d.0.99percent What is the variance on this stock? a. 0.005071 b. 0.004927 c.0.003896 d.0.005001 What is the standard deviation of the returns...
State Of Economy Probability Of State Returns   Stock Q Stock R Boom 10% 14%   16% Normal...
State Of Economy Probability Of State Returns   Stock Q Stock R Boom 10% 14%   16% Normal 90%   8% 11% 1. What is the expected return of Stock Q? What is the expected return of Stock R? 2. What is the Standard Deviation of Stock R? 3. What is the expected return of the portfolio if you invest $1,800 in Stock Q and $1,200 in Stock R? 4. What is the Standard Deviation of the Portfolio based on investing $1,800 in...
Given the following information: State of Economy Probability Rate of Return if State Occurs Stock G...
Given the following information: State of Economy Probability Rate of Return if State Occurs Stock G Rate of Return if State Occurs Stock H Boom 0.3 12% 25% Normal 0.5 15% 10% Recession 0.2 6% -18% Suppose you hold a portfolio with 60% invested in G and 40% invested in H. (1) What is the portfolio’s return if each state of the economy occurs, respectively? (2) What is the portfolio’s expected return? (3) What is the portfolio’s standard deviation?
You decide to invest in a portfolio consisting of 26 percent Stock A, 43 percent Stock...
You decide to invest in a portfolio consisting of 26 percent Stock A, 43 percent Stock B, and the remainder in Stock C. Based on the following information, what is the variance of your portfolio? State of Economy Probability of State Return if State Occurs of Economy Stock A Stock B Stock C Recession .127 − 11.40% − 4.80% − 13.80% Normal .691 10.70% 10.92% 18.20% Boom .182 21.81% 25.63% 30.33%
RTF stock is expected to return 11 percent in a normal economy and lose 15 percent...
RTF stock is expected to return 11 percent in a normal economy and lose 15 percent in a recession. The probability of a recession is 33 percent and the probability of a booming economy is zero. What is the variance of the returns on RTF stock? Show Claculaions please !!!! 0.019394 0.017864 0.014946 0.013760 0.019093