Question: Hi, I need help understanding this in excel. Please use numbers and not cell references if possible. Question 5: The returns for two assets, A
Hi,
I need help understanding this in excel. Please use numbers and not cell references if possible.
| Question 5: | ||||
| The returns for two assets, A and B, have been estimated under different scenarios in the year ahead as follows: | ||||
| Scenario | Probability | Asset A Return | Asset B Return | |
| Deep Recession | 20% | -5,30% | -1,50% | |
| Mild Recession | 30% | -1,50% | 1,70% | |
| Normal Conditions | 30% | 5,80% | 5,20% | |
| Good Economic Conditions | 15% | 16,00% | 7,90% | |
| Great Economic Conitions | 5% | 23,70% | 12,30% | |
| (a) Calculate the Expected Return and the Standard Deviation for each of these assets separately. | ||||
| (b) Assuming these are the only two investment options available to you, prepare the efficient frontier, showing the varios risk-return profiles you could achieve by investing in different combinations (weights) of these assets. | ||||
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