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Question 1 You are provided with the returns on Sombingo plc and Tangawizi plc shares which vary depending on the state of economic growth as depicted in the table below State of the economy Boom Growth Recession Probability of economic state occuring 0.15 0.7 0.15 Returns on Sombingo shares 45 20 -10 Returns on Tangawizi shares 18 17 56 16

Question 1 You are provided with the returns on Sombingo plc and Tangawizi plc shares which vary depending on the state of economic growth as depicted in the table below State of the economy Boom Growth Recession Probability of economic state occuring 0.15 0.7 0.15 Returns on Sombingo shares 45 20 -10 Returns on Tangawizi shares 18 17 56 16

Essentials Of Investments
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
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1 Question 1 You are provided with the returns on Sombingo plc and Tangawizi plc shares which vary depending on the state of economic growth as depicted in the table below State of the economy Boom Growth Recession Required ii. Probability of economic state occuring iv. 0.15 0.7 0.15 Returns on Sombingo shares 45 20 -10 Returns on Tangawizi shares 18 17 16 Calculate the expected return and standard deviation of returns for Sombingo shares. Calculate the expected return and standard deviation of returns for Tangawizi shares iii. What are covariance and correlation coefficient between the returns of 554 Sombingo and Tangawizi? Determine a portfolio expected return and standard deviation if two thirds of fund is devoted to Sombingo shares and one-third devoted to Tangawizi shares.
Transcribed Image Text:1 Question 1 You are provided with the returns on Sombingo plc and Tangawizi plc shares which vary depending on the state of economic growth as depicted in the table below State of the economy Boom Growth Recession Required ii. Probability of economic state occuring iv. 0.15 0.7 0.15 Returns on Sombingo shares 45 20 -10 Returns on Tangawizi shares 18 17 16 Calculate the expected return and standard deviation of returns for Sombingo shares. Calculate the expected return and standard deviation of returns for Tangawizi shares iii. What are covariance and correlation coefficient between the returns of 554 Sombingo and Tangawizi? Determine a portfolio expected return and standard deviation if two thirds of fund is devoted to Sombingo shares and one-third devoted to Tangawizi shares.
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