Homework Help is Here – Start Your Trial Now!
Math
Statistics
Suppose you have some money to invest-for simplicity, $1-and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a bond mutual fund. Suppose that S1 invested in a stock fund yields Rg after 1 year and that $1 invested in a bond fund yields R,, suppose that Rs is random with mean 0.07 (7%) and standard deviation 0.06, and suppose that R, is random with mean 0.04 (4%) and standard deviation 0.04. The correlation between R, and R, is 0.22. If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R= wRs + (1- w)Rn. Suppose that w= 0.44. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is . (Round your response to three decimal places.) Suppose that w= 0.66. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is. (Round your response to three decimal places.) What value of w makes the mean of R as large as possible? w = maximizes u. (Round your response to two decimal places.) What is the standard deviation of R for this value of w? for this value of w. (Round your response to two decimal places.) What is the value of w that minimizes the standard deviation of R? w = minimizes the standard deviation of R. (Round your response to two decimal places.)

Suppose you have some money to invest-for simplicity, $1-and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a bond mutual fund. Suppose that S1 invested in a stock fund yields Rg after 1 year and that $1 invested in a bond fund yields R,, suppose that Rs is random with mean 0.07 (7%) and standard deviation 0.06, and suppose that R, is random with mean 0.04 (4%) and standard deviation 0.04. The correlation between R, and R, is 0.22. If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R= wRs + (1- w)Rn. Suppose that w= 0.44. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is . (Round your response to three decimal places.) Suppose that w= 0.66. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is. (Round your response to three decimal places.) What value of w makes the mean of R as large as possible? w = maximizes u. (Round your response to two decimal places.) What is the standard deviation of R for this value of w? for this value of w. (Round your response to two decimal places.) What is the value of w that minimizes the standard deviation of R? w = minimizes the standard deviation of R. (Round your response to two decimal places.)

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
See similar textbooks
icon
Related questions
Question
Suppose you have some money to invest-for simplicity, $1-and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a bond mutual fund. Suppose that S1 invested in a stock fund yields Rg after 1 year and that $1 invested in a bond fund yields R,, suppose that Rs is random with mean 0.07 (7%) and standard deviation 0.06, and suppose that R, is random with mean 0.04 (4%) and standard deviation 0.04. The correlation between R, and R, is 0.22. If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R= wRs + (1- w)Rn. Suppose that w= 0.44. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is . (Round your response to three decimal places.) Suppose that w = 0.66. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is. (Round your response to three decimal places.) What value of w makes the mean of R as large as possible? w = maximizes u. (Round your response to two decimal places.) What is the standard deviation of R for this value of w? for this value of w. (Round your response to two decimal places.) What is the value of w that minimizes the standard deviation of R? w = minimizes the standard deviation of R. (Round your response to two decimal places.)
Transcribed Image Text:Suppose you have some money to invest-for simplicity, $1-and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a bond mutual fund. Suppose that S1 invested in a stock fund yields Rg after 1 year and that $1 invested in a bond fund yields R,, suppose that Rs is random with mean 0.07 (7%) and standard deviation 0.06, and suppose that R, is random with mean 0.04 (4%) and standard deviation 0.04. The correlation between R, and R, is 0.22. If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R= wRs + (1- w)Rn. Suppose that w= 0.44. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is . (Round your response to three decimal places.) Suppose that w = 0.66. Compute the mean and standard deviation of R. The mean is |- (Round your response to three decimal places.) The standard deviation is. (Round your response to three decimal places.) What value of w makes the mean of R as large as possible? w = maximizes u. (Round your response to two decimal places.) What is the standard deviation of R for this value of w? for this value of w. (Round your response to two decimal places.) What is the value of w that minimizes the standard deviation of R? w = minimizes the standard deviation of R. (Round your response to two decimal places.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman
SEE MORE TEXTBOOKS