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B. You have been researching Supermotion now want to consider adding this third asset to your original portfolio. Supermotion has returns of 5, 2, 0 and 2% (.05, .02, 0.0, .02) expected under the four states from Boom through Depression respectively. You plan to investment $22000 in BrunoMaster, $185000 in NewTorch and the remainder in Supermotion. a. Calculate the expected return on this new portfolio. b. Calculate the covariances between the three assets? c. Calculate the variance and standard deviation of this new portfolio. d. How do the results of this portfolio compare to the results of the prior two asset portfolio? Explain. B. You have been researching Supermotion now want to consider adding this third asset to your original portfolio. Supermotion has returns of 5, 2, 0 and 2% (.05, .02, 0.0, .02) expected under the four states from Boom through Depression respectively. You plan to investment $22000 in BrunoMaster, $185000 in NewTorch and the remainder in Supermotion. a. Calculate the expected return on this new portfolio. b. Calculate the covariances between the three assets? c. Calculate the variance and standard deviation of this new portfolio. d. How do the results of this portfolio compare to the results of the prior two asset portfolio? Explain.
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Answer rating: 100% (QA)
a To calculate the expected return on the new portfolio we can use the following formula ER w ER w E... View the full answer
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Posted Date:
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