You own a portfolio with 41% invested in stock X, 37% invested in stock Y, and 22% invested in stock Z. There is a 56% probability of a good economy and a 44% probability of a bad economy. Returns in a good economy are expected to be: -5% for X, 23% for Y, and 31% for Z. Returns in a bad economy are expected to be: 14% for X, 6% for Y, and 1% for Z. 1. Your portfolio suffered a terrible year that was three standard deviations below the expected portfolio return. What was your return? (percentage) 2. What is the variance of your portfolio? (decimal, four places right of the decimal)
You own a portfolio with 41% invested in stock X, 37% invested in stock Y, and 22% invested in stock Z. There is a 56% probability of a good economy and a 44% probability of a bad economy. Returns in a good economy are expected to be: -5% for X, 23% for Y, and 31% for Z. Returns in a bad economy are expected to be: 14% for X, 6% for Y, and 1% for Z. 1. Your portfolio suffered a terrible year that was three standard deviations below the expected portfolio return. What was your return? (percentage) 2. What is the variance of your portfolio? (decimal, four places right of the decimal)
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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You own a portfolio with 41% invested in stock X, 37% invested in stock Y, and 22% invested in stock Z. There is a 56% probability of a good economy and a 44% probability of a bad economy. Returns in a good economy are expected to be: -5% for X, 23% for Y, and 31% for Z. Returns in a bad economy are expected to be: 14% for X, 6% for Y, and 1% for Z.
1. Your portfolio suffered a terrible year that was three standard deviations below the expected portfolio return. What was your return? (percentage)
2. What is the variance of your portfolio? (decimal, four places right of the decimal)
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