Question

State of the economy Probability T-bills High Tech Collections U.S. Rubber Market Portfolio Two-Stock Portfolio Recession...

State of the economy Probability T-bills High Tech Collections U.S. Rubber Market Portfolio Two-Stock Portfolio
Recession 0.1 3.00% -29.50% 24.50% 3.50% -19.50% -2.50%
Below average 0.2 3 -9.5 10.5 -16.5 -5.5
Average 0.4 3 12.5 -1 0.5 7.5 5.8
Above Average 0.2 3 27.5 -5 38.5 22.5
Boom 0.1 3 42.5 -20 23.5 35.5 11.3
Rate of Return 1.20% 7.30% 8.00%
Standard Deviation 11.2 18.8 15.2 4.6
CV 9.8 2.6 1.9 0.8
b -0.5 0.88
How do you calculate the rate of return on each alternative, and fill in the blanks on the row under boom in the table? Calculate standard deviations as well.

Homework Answers

Answer #1

beta of market portfolio is always 1.

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