Question: Given the following possible expected returns over the three different states of the economy, the data for a share of Hilton Hotels Groups common stock
Given the following possible expected returns over the three different states of the economy, the data for a share of Hilton Hotels Groups common stock is demonstrated below:
| State of the Economy | Probability (p_each state) | Anticipated Rate of Return (r) |
| Recession | 10.00% | -1.00% |
| Normal Year | 30.00% | 8.00% |
| Boom | 60.00% | 18.00% |
Based on the data table, calculate the expected return and standard deviation for a share of Hilton Hotels Groups common stock respectively.
- 13.20 and 7.40%
- 13.10 and 8.25%
- 13.10% and 6.48%
- 13.20% and 42.00%
Imagine that an investor would like to compare the investment options based on the financial information presented at the table below. This investor wants to see if the portfolio risk and return levels are matching with his investment standards.
| Investment | r |
| w |
| Stocks | 10.00% | 3.00 | 60.00% |
| Mutual Funds | -4.00% | 5.00 | 40.00% |
If the correlation coefficient of the two securities above is -0.40, determine the portfolio return and risk respectively.
- 4.40%, 2.09
- 7.60%, 2.24
- 5.80%, 2.69
- 4.40%, 3.18
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help