$58 if the economy is good, with a probability of 30%. $36 if the economy is...
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$58 if the economy is "good", with a probability of 30%. $36 if the economy is "moderate", with a probability of 55%. $22.5 if the economy is "bad", with a probability of 15%. a) Calculate the expected return for holding the share for a year. (2 marks) b) Calculate the variance of return and standard deviation of return. (2 marks) c) Explain the concept and benefits of portfolio diversification. Is it possible to diversify away all risk in a portfolio? Explain your a (2 marks) ..can be bought on the d) Suppose that shares in a different company Eag market, with returns as follows 1% if the economy is "good", .4% if the economy is "moderate", and • 5% if the economy is "bad". Explain how you could use Eagle Inc. shares in conjunction with shares in Zephyr Ltd. To create a diversified portfolio. You do NOT need to do any calculations here. (2 marks) e) Explain the difference between expected return and realised return. (2 marks) $58 if the economy is "good", with a probability of 30%. $36 if the economy is "moderate", with a probability of 55%. $22.5 if the economy is "bad", with a probability of 15%. a) Calculate the expected return for holding the share for a year. (2 marks) b) Calculate the variance of return and standard deviation of return. (2 marks) c) Explain the concept and benefits of portfolio diversification. Is it possible to diversify away all risk in a portfolio? Explain your a (2 marks) ..can be bought on the d) Suppose that shares in a different company Eag market, with returns as follows 1% if the economy is "good", .4% if the economy is "moderate", and • 5% if the economy is "bad". Explain how you could use Eagle Inc. shares in conjunction with shares in Zephyr Ltd. To create a diversified portfolio. You do NOT need to do any calculations here. (2 marks) e) Explain the difference between expected return and realised return. (2 marks)
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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