Investment Alternatives Corn Belt (1) Central Valley (2) Great Plains (3) Exp. Return ri =0.14 r2=0.12 r3=0.07 Std. Dev. 01=0.08 02=0.05 03=0.01 Weight in Portfolio Wi=1/3 W2=1/3 W3=1/3 Correlation Among Investment 1 and 2 (p12) = 0.30 1 and 3 (P13) = -0.40 2 and 3 (p23) = -0.10 Portfolio Data for Financial Servicing Analysis Under Risk a. Calculate the expected return of the portfolio. b. Calculate the variance and the standard deviation of the portfolio. c. Calculate the variance and standard deviation of the portfolio assuming that the correlation among the investments is all equal to 0.
Investment Alternatives Corn Belt (1) Central Valley (2) Great Plains (3) Exp. Return ri =0.14 r2=0.12 r3=0.07 Std. Dev. 01=0.08 02=0.05 03=0.01 Weight in Portfolio Wi=1/3 W2=1/3 W3=1/3 Correlation Among Investment 1 and 2 (p12) = 0.30 1 and 3 (P13) = -0.40 2 and 3 (p23) = -0.10 Portfolio Data for Financial Servicing Analysis Under Risk a. Calculate the expected return of the portfolio. b. Calculate the variance and the standard deviation of the portfolio. c. Calculate the variance and standard deviation of the portfolio assuming that the correlation among the investments is all equal to 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
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Transcribed Image Text:Investment Alternatives
Corn Belt (1)
Central Valley (2)
Great Plains (3)
Exp. Return
ri =0.14
r2=0.12
r3=0.07
Std. Dev.
01=0.08
02=0.05
03=0.01
Weight in Portfolio
Wi=1/3
W2=1/3
W3=1/3
Correlation Among Investment
1 and 2 (p12)= 0.30
1 and 3 (p13) = -0.40
2 and 3 (p23) = -0.10
%3D
Portfolio Data for Financial Servicing Analysis Under Risk
a. Calculate the expected return of the portfolio.
b. Calculate the variance and the standard deviation of the portfolio.
c. Calculate the variance and standard deviation of the portfolio assuming that the
correlation among the investments is all equal to 0.
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