Question: how to get state 5 probability Problem 4 (23 marks Consider the following probability distribution for stocks A and B StateProbability -T Return on Stock

how to get state 5 probability

Problem 4 (23 marks Consider the following probability distribution for stocks A and B StateProbability -T Return on Stock A 0.10 0.20 0.20 0.30 10% 13% 12% 14% 15% Return on StockB 8% 7% 6% 9% 8% Stock A has a correlation with the market portfolia of 0,75 and stock B has a correlation with the market portfolio of 0.3. The market portfolio has a standard deviation of 12%. The risk free rate is equal to 2.5%. a) Calculate the expected return of stock A and Stock B b) Calculate the standard deviation of stock A and stock B c) Calculate the coefficient of correlation between Stock A and Stock B ) If you invest 40% of your money in A and 60% in B, what would be the expected rate of return and 65 12 standard deviation your portfolio? 2

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!

How to do question D,E,F,G answer? Problem 4 (23 marks Consider the following probability distribution for stocks A and B: State Probability 0.10 0.20 0.20 0.30 Return on StockA 10% 13% 12% 14% 15%...

Problem #4 (11 marks) Consider the following information for the returns of two stocks: GameStop Corp. (GME) and Walmart Inc. (WMT). You consider five possible scenarios for the stocks' returns...

Please type the answer with the formula, do not do it in excel. Thanks. Problem 3 (25 marks): Consider the following information about stocks I and II: Rate of return if state occurs State of economy...

b) What is the expected return of your portfolio? (2 marks) c) What is the standard deviation of your portfolio? (2 marks) Problem 8 (25 marks) Consider the following probability distribution for...

Consider the following information: Rate of return Probability Stock A Stock B 0.30 -40% 6% State of Economy Recession Normal Boom 0.50 18% 4% 0.20 142% 2% [Note: take full decimal places in the...

FIN220 SEM 191 1. Jerome is considering investing $10,000 in a security that has the following distribution of possible one-year returns 0.10 0.20 0.30 0.30 0.10 Probability of Occurrence Possible...

4 3 points Consider the following probability distribution for stocks of Shell and BP: State 1 2 3 4 5 Probability 0.10 0.20 0.20 0.30 0.20 Return on Shell Return on BP 10% 8% 13% 7% 12% 6% 14% 9%...

Can someone please help me solve these problems showing all work using formulas (not on a calculator) Problem 1 FIN300 Corp. believes the following probability distribution exists for its stock. What...

Remaining Time: 1 hour, 48 minutes, 06 seconds. Question Completion Status: A Moving to another question will save this response. Question 4 Spreadsheet 15437.xlsx Consider the following probability...

Problem 1 FIN300 Corp. believes the following probability distribution exists for its stock. What is the expected return and the standard deviation of the company's stock? State of the Econom Boom...

What are the two most important provisions of the Export Trading Company Act?

If Earth were of uniform density (same mass/volume throughout), what would the value of g be inside Earth at half its radius?

13-10 General Data Protection Regulations (GDPR) protect consumers privacy in which geographic area? a. California b. Illinois c. the United States d. the European Union e. the Republic of South...

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...