Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![2. Consider the following information:
STATE
ECONOMY
Boom
Good
Poor
Bust
OF PROBABILITY OF RATE OF RETURN IF STATE OCCURS
OF FIRM A
FIRM B
STATE
ECONOMY
0.15
0.55
0.20
0.10
0.33
0.11
0.02
-0.12
0.45
0.10
0.02
-0.25
FIRM C
b. What is the variance of this portfolio? The standard deviation?
0.33
0.17
-0.05
-0.09
a. Your portfolio is invested 25% each in A and C and 50% in B. What is the expected return of the
portfolio?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb81a4db1-ff6b-4f39-adb5-2114c787125d%2Ff870a3d6-31c1-4f9a-8c87-4468285a29d5%2Fsuewa76_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Consider the following information:
STATE
ECONOMY
Boom
Good
Poor
Bust
OF PROBABILITY OF RATE OF RETURN IF STATE OCCURS
OF FIRM A
FIRM B
STATE
ECONOMY
0.15
0.55
0.20
0.10
0.33
0.11
0.02
-0.12
0.45
0.10
0.02
-0.25
FIRM C
b. What is the variance of this portfolio? The standard deviation?
0.33
0.17
-0.05
-0.09
a. Your portfolio is invested 25% each in A and C and 50% in B. What is the expected return of the
portfolio?
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