Intro The table below shows the expected rates of return for three stocks and their weights in some portfolio: Stock A Portfolio weights 0.4 Stock B 0.2 Stock C 0.4 State Probability Expected returns Recession 0.2 0.03 0.05 -0.05 Normal Boom 0.5 0.06 0.09 0.02 0.3 0.11 0.11 0.1 Part 1 What is the expected portfolio return? 3+ decimals Submit Attempt 1/2 for 10 pts. Part 2 What is the standard deviation of the portfolio returns? Attempt 1/2 for 10 pts. 4+ decimals Submit

Intro The table below shows the expected rates of return for three stocks and their weights in some portfolio: Stock A Portfolio weights 0.4 Stock B 0.2 Stock C 0.4 State Probability Expected returns Recession 0.2 0.03 0.05 -0.05 Normal Boom 0.5 0.06 0.09 0.02 0.3 0.11 0.11 0.1 Part 1 What is the expected portfolio return? 3+ decimals Submit Attempt 1/2 for 10 pts. Part 2 What is the standard deviation of the portfolio returns? Attempt 1/2 for 10 pts. 4+ decimals Submit

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 3P: Two-Asset Portfolio Stock A has an expected return of 12% and a standard deviation of 40%. Stock B...

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a. Based on the following information, calculate the expected return and standard deviation for each of the following stocks. What are the covariance and correlation between the returns of the two stocks? Calculate the portfolio returm and portfolio standard deviation if you invest equally in each asset. Returns State of Economy Prob J K Recession 0.25 -0.02 0.034 Normal 0.6 0.138 0.062 Boom 0.15 0.218 0.092 b. A portfolio that combines the risk-free asset and the market portfolio has an expected return of percent and a standard deviation of 10 percent. The risk-free rate is 4 percent, and the Page 7 of 33 expected return on the market portfolio is 12 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a 45 corelation with the market portfolio and a standard deviation of 55 percent? C. Suppose the risk-free rate is 4.2 percent and the market portfolıo has an expected return of 10.9 mercent Tibemadkat normfeliobasiabiamance…
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Intro The table below shows the expected rates of return for three stocks and their weights in some portfolio: State Recession Normal Boom Stock A Portfolio weights 0.5 Probability 0.2 0.5 0.3 0.02 0.05 0.1 Stock B 0.2 Expected returns 0.04 0.08 0.1 Stock C 0.3 -0.04 0.03 0.11
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