Question: 1. Calculating Expected Returns and std dev with Unequal Probabilities Suppose you thought a boom would occur 20 percent of the time instead of 50

1. Calculating Expected Returns and std dev with Unequal Probabilities

Suppose you thought a boom would occur 20 percent of the time instead of 50 percent (So Recession probability = 1.00 0.20 = 0.80. )

What are the expected returns on Starcents and Jpod in this case? If the risk-free rate is 10 percent, what are the risk premiums?

What is the standard deviation of Starcents and Jpd, respectively?

2. Calculating Expected Returns and std dev of portfolio with Unequal Probabilities & unequal portfolio weights

Suppose you invest 30% into Starcents and 70% into Jpods What is the expected return of this portfolio?

What is the standard deviation of this portfolio

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