Portfolio A Probability Return 0.22 -4% 0.50 18% 0.28 23% Click on the icon in order to copy its contents int .The expected rate of return for portfolio A is %
Portfolio A Probability Return 0.22 -4% 0.50 18% 0.28 23% Click on the icon in order to copy its contents int .The expected rate of return for portfolio A is %
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:(Computing the expected rate of return and risk) After a tumultuous period in the stock market, Logan Morgan is considering an investment in one of two portfolios. Given the
information that follows, which investment is better, based on risk (as measured by the standard deviation) and return as measured by the expected rate of return?
Portfolio A
Portfolio B
Probability
0.22
Return
-4%
Probability
Return
0.12
6%
0.50
18%
0.28
10%
0.28
23%
0.35
13%
0.25
17%
(Click on the icon in order to copy its contents into a spreadsheet.)
a. The expected rate of return for portfolio A is
%. (Round to two decimal places.)
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