Build a spreadsheet that automatically computes the expected market return and risk for different assumptions about the
Question:
a. First, create the following spreadsheet and compute the expected return and standard deviation.
b. Compute the expected return and risk for the following scenarios:
and
Transcribed Image Text:
1 State of Economy Probability of State Expected Market Return 2 Fast Growth 3 Slow Growth No Growth Recession Depression 0.13 0.42 0.25 0.18 0.02 35% 17% 3% 15% 30% Sum - 1.00 Expected Return- tandard Deviation- 10 State of Economy Fast Growth Slow Growth No Growth Recession Depression Probability of State 0.13 0.33 0.3 0.2 0.04 Expected Market Return 30% 15% 2% -18% 25% State of Economy Probability of State Expected Market Return 0.15 0.35 0.34 0.15 0.01 40% 18% Fast Growth Slow Growth No Growth Recession Depression 20% 35%
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