Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10 10 % 8 % 2 0.20 13 % 7 % 3 0.20 12 % 6 % 4 0.30 14 % 9 % 5 0.20 15 % 8 % If you invest 40% of your money in A and 60% in B, what would be your portfolio's expected rate of return and standard deviation? A. None of the options are correct. B. 11%; 1.1% C. 9.9%; 3% D. 11%; 3% E. 9.9%; 1.1%
Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10 10 % 8 % 2 0.20 13 % 7 % 3 0.20 12 % 6 % 4 0.30 14 % 9 % 5 0.20 15 % 8 % If you invest 40% of your money in A and 60% in B, what would be your portfolio's expected rate of return and standard deviation? A. None of the options are correct. B. 11%; 1.1% C. 9.9%; 3% D. 11%; 3% E. 9.9%; 1.1%
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
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Consider the following probability distribution for stocks A and B:
| State | Probability | Return on Stock A | Return on Stock B | |||||||
| 1 | 0.10 | 10 | % | 8 | % | |||||
| 2 | 0.20 | 13 | % | 7 | % | |||||
| 3 | 0.20 | 12 | % | 6 | % | |||||
| 4 | 0.30 | 14 | % | 9 | % | |||||
| 5 | 0.20 | 15 | % | 8 | % | |||||
If you invest 40% of your money in A and 60% in B, what would be your portfolio's expected
A. None of the options are correct.
B. 11%; 1.1%
C. 9.9%; 3%
D. 11%; 3%
E. 9.9%; 1.1%
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