Economic Probability B C D State Very poor 0.1 30% -25% 15% Poor 0.2 20% -5%...

 

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Economic Probability B C D State Very poor 0.1 30% -25% 15% Poor 0.2 20% -5% 10% Average 0.4 10% 15% 0% Good 0.2 0% 35% 25% Very good 0.1 -10% 55% 35% a. Based on the table above, construct an equal-weighted (50/50) portfolio of Investments B and C. What is the expected rate of return and standard deviation of the portfolio? b. Now construct an equal-weighted (50/50) portfolio of Investments B and D. What is the expected rate of return and standard deviation of the portfolio? Part A: E(R) for BC portfolio: Note: format answer is 12.3% SD for BC portfolio: Note: format answer is 1.2% Part B: E(R) for BD portfolio: Note: format answer is 12.3% This includes a trailing zero (if needed). SD for BD portfolio: Note: format answer is 1.2% Economic Probability B C D State Very poor 0.1 30% -25% 15% Poor 0.2 20% -5% 10% Average 0.4 10% 15% 0% Good 0.2 0% 35% 25% Very good 0.1 -10% 55% 35% a. Based on the table above, construct an equal-weighted (50/50) portfolio of Investments B and C. What is the expected rate of return and standard deviation of the portfolio? b. Now construct an equal-weighted (50/50) portfolio of Investments B and D. What is the expected rate of return and standard deviation of the portfolio? Part A: E(R) for BC portfolio: Note: format answer is 12.3% SD for BC portfolio: Note: format answer is 1.2% Part B: E(R) for BD portfolio: Note: format answer is 12.3% This includes a trailing zero (if needed). SD for BD portfolio: Note: format answer is 1.2%