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Compute: a) The expected rate of return. b) The standard deviation of the expected return. c) The expected return for Asset B is 18.32% and the standard deviation for Asset B is 19.51%. Based on your results in a) and b) above, which asset would you add to your portfolio?

Compute: a) The expected rate of return. b) The standard deviation of the expected return. c) The expected return for Asset B is 18.32% and the standard deviation for Asset B is 19.51%. Based on your results in a) and b) above, which asset would you add to your portfolio?

Essentials Of Investments
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
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Question 4 Risk and Return You are provided with the following information: Economic State Bear Average Bull Probabili tv 0.25 0.50 0.25 Asset A (return) -15% 25% 40% Compute: a) The expected rate of return. b) The standard deviation of the expected return. c) The expected return for Asset B is 18.32% and the standard deviation for Asset B is 19.51%. Based on your results in a) and b) above, which asset would you add to your portfolio?
Transcribed Image Text:Question 4 Risk and Return You are provided with the following information: Economic State Bear Average Bull Probabili tv 0.25 0.50 0.25 Asset A (return) -15% 25% 40% Compute: a) The expected rate of return. b) The standard deviation of the expected return. c) The expected return for Asset B is 18.32% and the standard deviation for Asset B is 19.51%. Based on your results in a) and b) above, which asset would you add to your portfolio?
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