EXERCISE 2 From the data below, find the following: [al expected return [b] Standard deviation [c] Variance [d] Coefficient of variation STATE OF THE RETURN (RB) PROBABILITY (Pi) ECONOMY BOOM 40% 0.4 NORMAL 30% 0.3 AVERAGE 16% 0.2 RECESSION 14% 0.1

Q: Find expected return for G.

A: Expected Return is the amount of loss or profit an investor expects to receive on an investment.

Q: Year 2017 2018 2019 2020 2021 2022 Price Dividend 83.64 68.19 69.69 41.88 61.19 110.3 3.23 3.43 3.48…

A: YearsPriceDividend201783.64201868.193.23201969.693.43202041.883.48202161.193.492022110.33.55Required…

Q: % Return on T-Bills, Stocks and Market Index   States of Economy Probability T-Bills Phillips…

A: Security market line (SML)- It is graphical representation of the capital asset pricing model or…

Q: Dependent Variable: PORTFOLIO Method: Least Squares Sample: 1991M01 2009M12 Included observations:…

A: The objective of the question is to determine if the given model is statistically significant and to…

Q: Based on the following information, what is the standard deviation of returns? Rate of Return if…

A: Deviation = Return -expected returnSquared deviation = Deviation ^2Standard deviation = Variance…

Q: Elrond has made an investment that will generate returns that are based on the state of the economy.…

A: Portfolio variance:Portfolio variance is a statistical measure of how much the returns on different…

Q: Stock W's standard coefficient of variance (CV) is Stock W’s Sharpe ratio assuming the risk-free is…

A: 1. Calculation of Stock W's Expected return and Standard Deviation State of Economy Probability…

Q: Coefficient of Variation

A: Please note that I'm assuming that we need to calculate the Coefficient of variation of the 2…

Q: Risk-Adjusted Performance Measures Sharpe Ratio Treynor's Measure Information Ratio A 0.4750 -0.0082…

A: Risk adjusted measures are used to determine the reward an investor would get for taking that amount…

Q: Use the means and standard deviations of return for MSFT and TSLA in percent per month that are…

A: Opportunity set is the set of all possible portfolios that an investor may construct from a given…

Q: State of Economy Probability Habib Bank Middie East Financials Pandemic 18% 2% 13% Recession 28% 16%…

A: Given information: State of Economy Probabilty Habib bank returns Pandemic 18% 2% Recession…

Q: Consider the following information for the next year's return on IBM. probability return 10% 20% 0.8…

A: The profit or loss that an investor predicts on an investment with known historical rates of return…

Q: Given an expected return of 8% and a standard deviation of 9%, we can predict that there is a _____…

A: Given: Expected Return/Mean = 8% Standard deviation σ = 9% Observed Values = -19% and 35% Using the…

Q: R

A: Formula for expected return: E(r) = R1P1 + R2P2...........RnPn Variance = p1[R1 - E(r))^2…

Q: Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of…

A: The weightage of each scenario's chance of occurrence together with the profit that could be…

Q: Consider the following information: State Probability i of State i Actual Return of Johnson and…

A: Step 1: Expected Return (Mean)Expected Return = (Probability of Boom * Return in Boom) +…

Q: Condition economy Strong Normal Weak Company A Company B of Probability % Return if this return if…

A: Expected returns for an investment refers to the profit that the investors forecasts based on…

Q: Consider the following information: State of Economy Boom Good Poor Bust a. Probability of State- of…

A: Expected return refers to the rate of return that is being earned by the investors over the amount…

Q: at is the variance of returns for Security ABC? probability distribution fro security ABC:…

A: Mean return would be expected probabilistic rate of return in both outcomes and variance would be…

Q: Please find out expected return and variance of following investment opportunity. Probability Rate…

A: The Return anticipated or estimated to be generated from the project is known as expected return.…

Q: 2. Given the following historical returns, calculate the average return and the standard deviation:…

A: standard deviation = square root of (sum of (Return-average)^2)

Q: Returns             Year   X     y   1   17  %   20  % 2   20     32   3   11     15   4 – 7   – 18…

A: arithmetic average =sum of return/5 Arithmetic average =17+20+11-7+10/5=51/5=10.2 Arithmetic average…

Q: Over the past 3 years an investment returned 0.19, -0.11, and 0.07. What is the variance of returns?

A: Variance: Variance is the measure of dispersion of returns of an investment.

Q: P8-1 Expected Return Given these three economic states, their likelihoods, ane potential returns,…

A: The expected return is the average return considering the different probabilities of different…

Q: Dr. Sumaya Ali wish to invest in Asset A and Asset B for three different state like Boom, Normal and…

A: Expected return is the average sum of all the expected returns from an investment or project. It is…

Q: Use the information from this table to find the variance for each asset. State of Economy…

A: Formulas for asset J:

Q: Which one of the following is defined as the average compound return earned per year over a…

A: In every business, amounts are being invested for the purpose of calculating and earnings returns.…

Q: b) Calculate the variance and standard deviation.

A: Calculation of expected return Probability Return Expected return A B C=A*B 30% -13% -3.90%…

Q: Probability Return 0.35 -2% 0.35 12% 0.3 18% Expected return is ______ ?

A: The table is: Probability Return 0.35 -2% 0.35 12% 0.3 18%

Q: Security A B C Beta 0.8 1.0 1.2 Expected Return 10% 12% 14% Residual standard deviation 25% 10% 20%…

A: According to Single Index model , Variance of stock is calculated as follows:-Variance of stock =…

Q: State of Economy Probability of State of Economy Rate of Return if State Occurs   Recession .21…

A: Expected return = 0.21*-13% + 0.49*15% + 0.30*34%

Q: State of Economy Probability T Bills Phillips Payup Rubbermade Market Index Recession 0.2 7…

A: Probability T-Bills Philips Pay-up Rubber-Made Market Index 0.2 7.00 -22.00 28.00 10.00 -13.00…

Q: Consider the following information: State of Economy Boom Good Poor Bust Probability of State- of…

A: The standard deviation is the square root of variance. Calculating the expected return of a…

Q: Consider the following information: Probability of State- State of Economy of Economy Boom Good Poor…

A: Tabulate the data and then calculate the expected return of each stock by multiplying each stock…

Q: 3. Security A has the following probability distribution of returns: Scenario Probability Return 0.1…

A: Calculation: Formula snip:

Q: Use the following information to answer the question.    Based on above data, determine the…

A: Given information : Outcome  Probability  Return Recession  20% -20% Expansion 25% 15% Boom…

Q: coefficient variation=.55 positive coeficient of correlation =.20 expected value=$1200 What does…

A: The measure that is used to calculate the dispersion of dataset is called the standard deviation. It…

Q: Consider the following information:   State of Economy Probability of State of Economy Rate of…

A: In the case of probabilistic data, return is calculated by multiplying each return by its respective…

Q: Consider the following returns and states of the economy for TZ.Com.: EconomyProbabilityReturn Weak…

A: The expected return is the product of the probability and returns of the investment.Information…

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.