he colleague has given you his forecasts of stocks W and E as follows: State Probability Expected rate of Returns on Stock W Expected rate of Returns on Stock E Boom 0.7 0.40 -0.10 Bust 0.3 -0.05 0.30 She would like to invest 80% of his money in stock W and 20% of her money in stock E to construct a portfolio. (B) Calculate the portfolio's expected rate of returns and its standard deviation
he colleague has given you his forecasts of stocks W and E as follows: State Probability Expected rate of Returns on Stock W Expected rate of Returns on Stock E Boom 0.7 0.40 -0.10 Bust 0.3 -0.05 0.30 She would like to invest 80% of his money in stock W and 20% of her money in stock E to construct a portfolio. (B) Calculate the portfolio's expected rate of returns and its standard deviation
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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The colleague has given you his
| State | Probability | Expected Returns |
Expected rate of Returns on Stock E |
| Boom | 0.7 | 0.40 | -0.10 |
| Bust | 0.3 | -0.05 | 0.30 |
She would like to invest 80% of his money in stock W and 20% of her money in stock E to construct a portfolio.
(B) Calculate the portfolio's expected rate of returns and its standard deviation
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