Question
You are trying to form portfolios based on the following information: State Probability Return A Return...
You are trying to form portfolios based on the following information:
|
State |
Probability |
Return A |
Return B |
|
Poor |
20.0% |
-4.0% |
-4.0% |
|
Normal |
40.0% |
3.0% |
8.0% |
|
Good |
30.0% |
10.0% |
8.0% |
|
Very Good |
10.0% |
30.0% |
10.0% |
You also know the risk-free rate is 5%.
Question 1: Calculate the Expected Returns for both Stock A and Stock B
Question 2: Calculate the Standard Deviation for both Stock A and Stock B
Question 3: Calculate the Sharpe Ratios of both Stock A and Stock B
Homework Answers
Answer #1
Stock A:
&
Stock B:
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