Consider the following information: State of Economy Recession Normal Boom Probability 0.4 0.45 0.15 Stock A...
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Consider the following information: State of Economy Recession Normal Boom Probability 0.4 0.45 0.15 Stock A -80% 28% 200% Rate of return Stock B 12% 8% 6% (a) Calculate the expected return for the two Stocks A and B respectively.(in %) (b) Calculate the standard deviation for the two Stocks A and B respectively. (in %) (4 marks) (6 marks) (c) If you have $200,000 to invest in a stock portfolio and your goal is to create a portfolio with an expected return of 9.924%. Based on your answer in part (a), how much money will you invest in Stock A and Stock B respectively? (6 marks) Consider the following information: State of Economy Recession Normal Boom Probability 0.4 0.45 0.15 Stock A -80% 28% 200% Rate of return Stock B 12% 8% 6% (a) Calculate the expected return for the two Stocks A and B respectively.(in %) (b) Calculate the standard deviation for the two Stocks A and B respectively. (in %) (4 marks) (6 marks) (c) If you have $200,000 to invest in a stock portfolio and your goal is to create a portfolio with an expected return of 9.924%. Based on your answer in part (a), how much money will you invest in Stock A and Stock B respectively? (6 marks)
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Related Book For
Fundamentals of Investments Valuation and Management
ISBN: 978-0077283292
5th edition
Authors: Bradford D. Jordan, Thomas W. Miller
Posted Date:
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