There are two assets and three states of the economy:State of Economy Probability of State of Economy Rate of Return If State OccursStock ARecessionNormalStock B.30.50-.20.40.10.80.30Boom.20Suppose you have $20,000 total. If you put $15,000 in Stock A and the remainder in Stock B, what will be the standarddeviation of your portfolio? (Keep 2 post decimal digits in your final answer).50

Standard deviation is the quantative measure of risk and volatility of the stock and measured as…

There are two assets and three states of the economy: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock A Stock B Recession Normal Boom Suppose you have $20,000 total. If you put $15,000 in Stock A and the remainder in Stock B, what will be the st deviation of your portfolio? (Keep 2 post decimal digits in your final answer) .30 .50 .20 -.20 .40 .80 .10 .30 .50

There are two assets and three states of the economy: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock A Stock B Recession Normal Boom Suppose you have $20,000 total. If you put $15,000 in Stock A and the remainder in Stock B, what will be the st deviation of your portfolio? (Keep 2 post decimal digits in your final answer) .30 .50 .20 -.20 .40 .80 .10 .30 .50

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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State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .21 .368 .468 .348 Good Poor .39 .138 .118 .188 .29 Bust .11 .028 -.128 .038 -.093 -.268 -.108 a. Your portfolio is invested 29 percent each in A and C and 42 percent in B. What is the expected return of the portfolio? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the variance of this portfolio? Note: Do not round intermediate calculations and round your answer to 5 decimal places, e.g., .16161. c. What is the standard deviation of this portfolio? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Expected return b. Variance c. Standard deviation % %
Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability 0.2 Stocks -7% Bonds 15% 0.7 16 7 0.1 25 6 Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds. a. What is the rate of return on the portfolio in each scenario? b. What are the expected rate of return and standard deviation of the portfolio? Complete this question by entering your answers in the tabs below. Required A Required B What is the rate of return on the portfolio in each scenario? Note: Enter your answer as a percent rounded to 1 decimal place. Recession Normal economy Boom Rate of Return % % %
Probability State of of State of Economy Economy 0.40 0.60 Bust Boom State of Economy Bust Boom Security Returns if State Occurs Calculate the expected return on a portfolio of 55 percent Roll and 45 percent Ross by filling in the following table: Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Roll -17% 28% Probability of State of Economy 0.40 0.60 Ross 18% 7N Answer is complete but not entirely correct. Portfolio Return if State Occurs 0.04% 11.40% E(R) Product 5.50% 5.13 % 10.63 %
There are two assets and three states of the economy: State of Economy Recession Normal Soom Probability of State of Economy .30 1.50 20 Rate of Return If State Occurs Stock A -.20 .40 Stock B .10 .30 50 Suppose you have $20,000 total. If you put $15,000 in Stock A and the remainder in Stock B, what will be the standard deviation of your portfolio? (Keep 2 post decimal digits in your final answer)
M4
Suppose you observe the following situation: Probability of State 0.35 0.40 0.25 State of Economy Recession Normal Irrational exuberance Stock A Stock B Expected Return Rate of Return if State Occurs Stock B % Stock A a. Calculate the expected return on each stock. (Round the final answers to 2 decimal places.) -0.11 0.10 0.45 -0.09 0.10 0.25 b. Assuming the capital asset pricing model holds and stock A's beta is greater than stock B's beta by 0.65, what is the expected market risk premium? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected market risk premium
Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.30 0.50 0.20 Required A Required B Required C a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Stocks Bonds Rate of Return Stocks -4% Complete this question by entering your answers in the tabs below. Expected Rate of Return 4.3 % 6.2 % 17% 28% Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Bonds 16% 10 % 98 Standard Deviation % %
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State of Economy Bust Boom State of Economy Probability of State of Economy Bust Boom Probability of State of Economy 0.60 0.40 0.60 0.40 Security Returns if State Occurs Calculate the expected return on a portfolio of 30 percent Roll and 70 percent Ross by filling in the following table: (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Roll -14% 32 Portfolio Return if State Occurs % Ross E(RP)= 15% 5 Product % % %
Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Required A Required B Required C a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Stocks Bonds Rate of Return Stocks Complete this question by entering your answers in the tabs below. Expected Rate of Return 16.4 % 10.6 % -5% 20% 27% Calculate the expected rate of return and standard deviation for each investment. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Bonds 19% 10% 4% Standard Deviation % %
F1 please help.....
Nikul

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