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PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW

PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW
Transcribed Image Text:PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW
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