Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. Work out the Covariance with mp showing detatiled working and explanation % Return on T-Bills, Stocks and Market Index States of Economy Probability T-Bills Phillips Pay-up Rubber-Made Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean 7 16.9 20.7 19.6 15 Variance (%) ^2 0 549.09 244.124 358.04 313.6 Standard Deviation 0 23.4326695 15.6244712 18.92194493 17.7087549 Coefficient of Variation 0 1.386548491 7.54805372 0.965405354 1.18058366 Covariance wit MP Correlation with Market Index Beta CAPM Req. Return Valuation ( Overvalued / Undervalued/Fairly Valued) Nature of Stock (Aggressive/Defensive
Consider the following information about the various states of economy and the
Work out the Covariance with mp showing detatiled working and explanation
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% Return on T-Bills, Stocks and Market Index
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States of Economy |
Probability |
T-Bills |
Phillips |
Pay-up |
Rubber-Made |
Market Index |
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Recession |
0.2 |
7 |
-22 |
28 |
10 |
-13 |
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Below Average |
0.1 |
7 |
-2 |
14.7 |
-10 |
1 |
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Average |
0.3 |
7 |
20 |
0 |
7 |
15 |
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Above Average |
0.3 |
7 |
35 |
-10 |
45 |
29 |
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Boom |
0.1 |
7 |
50 |
-20 |
30 |
43 |
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Mean |
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7 |
16.9 |
20.7 |
19.6 |
15 |
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Variance (%) ^2 |
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0 |
549.09 |
244.124 |
358.04 |
313.6 |
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Standard Deviation |
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0 |
23.4326695 |
15.6244712 |
18.92194493 |
17.7087549 |
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Coefficient of Variation |
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0 |
1.386548491 |
7.54805372 |
0.965405354 |
1.18058366 |
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Covariance wit MP |
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Correlation with Market Index |
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Beta |
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Valuation ( Overvalued / Undervalued/Fairly Valued) |
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Nature of Stock (Aggressive/Defensive |
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