James has asked you to do some analysis on a potential investment of $500,000. He would like to invest in two stocks: PFE and T. You have analyzed the stocks and have the following estimates for a 1-year time horizon: Ticker Expected Return Standard Deviation PFE 15.00% 35.00% T 5.00% 30.00% You estimate the correlation between the stock returns to be 10.00%. You are going to assume that both stock returns are normally distributed. This implies that a portfolio of the two stocks will have returns that are normally distributed. If he invests his entire investment in PFE what is the probability that he ends up with more than $485,000 in 1 year? Round your answer to 2 decimal places and write 2.55% as 2.55) If he invests his entire investment in T what is the probability that he ends up with less than $510,000 in 1 year? Round your answer to 2 decimal places and write 2.55% as 2.55) % if he invests 50% in PFE and 50% in T what are the first and third quartiles for the value of his investment in one year (the first quartile in the level for which 25% of the distribution is below and the third quartile is the level for which 25% of the possible distribution is above)? Round your answers to the nearest dollar. First quartile: Third quartile:
James has asked you to do some analysis on a potential investment of $500,000. He would like to invest in two stocks: PFE and T. You have analyzed the stocks and have the following estimates for a 1-year time horizon: Ticker Expected Return Standard Deviation PFE 15.00% 35.00% T 5.00% 30.00% You estimate the correlation between the stock returns to be 10.00%. You are going to assume that both stock returns are normally distributed. This implies that a portfolio of the two stocks will have returns that are normally distributed. If he invests his entire investment in PFE what is the probability that he ends up with more than $485,000 in 1 year? Round your answer to 2 decimal places and write 2.55% as 2.55) If he invests his entire investment in T what is the probability that he ends up with less than $510,000 in 1 year? Round your answer to 2 decimal places and write 2.55% as 2.55) % if he invests 50% in PFE and 50% in T what are the first and third quartiles for the value of his investment in one year (the first quartile in the level for which 25% of the distribution is below and the third quartile is the level for which 25% of the possible distribution is above)? Round your answers to the nearest dollar. First quartile: Third quartile:
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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