I. Consider a risky asset X. We suppose that the rate of return of the asset per year was observed as follows: year 2006 2007 2008 | 2009 2010 Rate of return 4.8% 3.3% -0.5% 2.4% | 0% (a) Answer the average of the rate of return in the above past 5-year data. (1) (1) 1.8% (2) 2.0% (3) 2.2% (4) 2.4% (5) 2.6% (b) Answer the standard deviation of the above data by rounding it off to two decimal places. Note that the bottom of the fraction in the definition of the standard deviation should be 4 here. [2] (1) 1.98% (2) 2.12% (3) 2.23% (4) 2.34% (5) 2.45 % (c) In addition to X, suppose another risky asset Y is available. The expected rate of return is 8% per year. When you invest into both X and Y by mixing 2 parts X with 1 part Y, what is the expected rate of return of the portfolio per year? [3] (3) 4.0% (1) 2.0% (2) 3.0% (4) 5.0% (5) 6.0 %
I. Consider a risky asset X. We suppose that the rate of return of the asset per year was observed as follows: year 2006 2007 2008 | 2009 2010 Rate of return 4.8% 3.3% -0.5% 2.4% | 0% (a) Answer the average of the rate of return in the above past 5-year data. (1) (1) 1.8% (2) 2.0% (3) 2.2% (4) 2.4% (5) 2.6% (b) Answer the standard deviation of the above data by rounding it off to two decimal places. Note that the bottom of the fraction in the definition of the standard deviation should be 4 here. [2] (1) 1.98% (2) 2.12% (3) 2.23% (4) 2.34% (5) 2.45 % (c) In addition to X, suppose another risky asset Y is available. The expected rate of return is 8% per year. When you invest into both X and Y by mixing 2 parts X with 1 part Y, what is the expected rate of return of the portfolio per year? [3] (3) 4.0% (1) 2.0% (2) 3.0% (4) 5.0% (5) 6.0 %
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
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education