Please do question 1f and 1g handwritten 1. You are trying to plan your investments for the next year. You havedecided that the market will either be strong (a bull market), weak (abear market) or normal. You think that stocks, bonds, and bills will earnthe following returns in these scenarios:ScenarioBull marketNormal marketBear marketProbability Stock0.200.550.25BondReturn Return0.250.10-0.150.060.030.02BillReturn0.030.030.03You have also decided that you have a risk-aversion (A) of 8.(a) What is the expected return for each of the securities?(b) What is the volatility of each security return?(c) What is the covariance between stock and bond returns?(d) If you combine stocks and bills as an investment, what is your op-timal combination? What is your expected return? What is yourportfolio's volatility?(e) If you combine bonds and bills, what is your optimal combination?What is your expected return? What is your portfolio's volatility?(f) If you combine stocks and bonds, what is your optimal combination?What is your expected return? What is your portfolio's volatility?|(g) If you combine all three assets in your portfolio, what is your op-timal combination? What is your expected return? What is yourportfolio's volatility?

Solution: From the given information,

Answered: You are trying to plan your investments…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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