Question: Expected return and standard deviation for stocks A and B are shown in the table below. State of Economy Probability of state of the economy

Expected return and standard deviation for stocks A and B are shown in the table below.

State of

Economy

Probability

of state of

the economy

Rate of return if state occurs

Stock

A

Stock

B

Recession

.2

-.10

.15

Normal

.5

.20

.22

Boom

.3

.60

.29

Expected return

.26

.227

Standard Deviation

.25

.05

1. Refer to the information in the table above. Suppose you have $50,000 total. If you put $30,000 in Stock A and $20,000 in Stock B, what will be the expected return of your portfolio.

2. Refer to the information in the table above and problem 1. Calculate the standard deviation of your portfolio.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

show work Reminder - show your work! Expected return and standard deviation for stocks A and B are shown in the table below. Probability Rate of return if state occurs State of of state of Economy...

Q:

Expected return and standard deviation for stocks A and B are shown in the table below. Rate of return if Probability State of state occurs of state of Economy the economy Stock Stock A B Recession...

Q:

Expected return and standard deviation for stocks A and B are shown in the table below. Probability Rate of return if state occurs State of of state of Economy the economy Stock Stock Recession 2 -10...

Q:

Given the expected return and standard deviation of stocks A and B as shown in the table: a. Calculate the coefficient of variation of stocks A and B, respectively. Round the results to 0.001 . b....

Q:

You purchase a corporate bond at $900 per $1,000 par value at issuance. The coupon rate is 8%, and the bond pays coupon annually. You predict that the price of the bond in one year (right after you...

Q:

Question \\#1: Measuring Risk and Return and the Optimal Risky Portfolio [18 Points] Ruby is an investor constructing a risky portfolio that contains 2 risky stocks: Texas Instruments (TXN) (Stock A)...

Q:

102. a. Based on the following information, calculate the expected return and standard deviation for stocks X and Y. State of Economy Probability of Economic State Return on Stock X Return on Stock Y...

Q:

1. Apex Corporation issued 25-year bonds two years ago at a coupon rate of 5.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM? (4 marks) 2....

Q:

22. Expected return and standard deviation. Use the information in the following to answer the questions below. State of Probability Return on R in Return on S in Return on T in Economy of State...

Q:

Prin Frod RockA Alarge change dubte -Exp weten W Exam 3-Part 2 Show your work as you answer the following questions. You must show approprate and cal work receive credit for a correct answer, Partial...

Q:

Can a reaction be a composition reaction and a redox reaction at the same time? Give an example to support your answer.

Q:

Let S be the set of all ordered pairs of real numbers. Define scalar multiplication and addition on 5 by (x1, x2) = (x1, x1, x2) (x1, x2) (y1, y2) = (x1 + y1, 0) We use the symbol to denote the...

Q:

1 . A Tiped Employee Earns \ ( \ $ 2 0 3 . 6 0 \ ) in tips for a 4 0 hour week. How much does the employer pay the employee as gross wages for the week? a . Assuming Federal Minimum wage ( \ ( \ $ 7...

Q:

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...