The expected market return and risk for different assumptions about the state of the economy is shown below. State of Economy Probability of State Expected Market Return Fast growth 0.11 35% Slow growth 0.50 16% No growth 0.20 5% Recession 0.15 -22% Depression 0.04 -32% Compute the expected return and standard deviation. Note: Round your answers to 2 decimal places. Compute the expected return and risk for the following 2 scenarios: Note: Round your answers to 2 decimal places. Scenario 1: State of Economy Probability of State Expected Market Return Fast growth 0.09 38% Slow growth 0.33 16% No growth 0.36 2% Recession 0.19-18% Depression 0.03 -32% Scenario 2: State of Economy Probability of State Expected Market Return Fast growth 0.16 40% Slow growth 0.31 13% No growth 0.38 2% Recession 0.12-17% Depression 0.03 -33%
The expected market return and risk for different assumptions about the state of the economy is shown below. State of Economy Probability of State Expected Market Return Fast growth 0.11 35% Slow growth 0.50 16% No growth 0.20 5% Recession 0.15 -22% Depression 0.04 -32% Compute the expected return and standard deviation. Note: Round your answers to 2 decimal places. Compute the expected return and risk for the following 2 scenarios: Note: Round your answers to 2 decimal places. Scenario 1: State of Economy Probability of State Expected Market Return Fast growth 0.09 38% Slow growth 0.33 16% No growth 0.36 2% Recession 0.19-18% Depression 0.03 -32% Scenario 2: State of Economy Probability of State Expected Market Return Fast growth 0.16 40% Slow growth 0.31 13% No growth 0.38 2% Recession 0.12-17% Depression 0.03 -33%
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
Problem 1PS
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Transcribed Image Text:The expected market return and risk for different
assumptions about the state of the economy is
shown below.
State of Economy Probability of State Expected
Market Return
Fast growth 0.11 35%
Slow growth 0.50 16%
No growth 0.20 5%
Recession 0.15 -22%
Depression 0.04 -32%
Compute the expected return and standard
deviation.
Note: Round your answers to 2 decimal places.
Compute the expected return and risk for the
following 2 scenarios:
Note: Round your answers to 2 decimal places.
Scenario 1:
State of Economy Probability of State Expected
Market Return
Fast growth 0.09 38%
Slow growth 0.33 16%
No growth 0.36 2%
Recession 0.19-18%
Depression 0.03 -32%
Scenario 2:
State of Economy Probability of State Expected
Market Return
Fast growth 0.16 40%
Slow growth 0.31 13%
No growth 0.38 2%
Recession 0.12-17%
Depression 0.03 -33%
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