K mputing the expected rate of return and risk) After a tumultuous period in the stock...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/664918edc9a43_541664918ed0be9e.jpg)
Transcribed Image Text:
K mputing the expected rate of return and risk) After a tumultuous period in the stock market, Logan Morgan is considering an investment in one of two portfolios. Given the information that follows, which investment is better, based on risk (as measured by the standard deviation) and return as measured by the expected rate of return? Portfolio A Portfolio B Probability 0.15 0.53 Return Probability Return - 1% 0.05 3% 0.32 20% 23% 0.25 9% 0.38 11% 0.32 16% (Click on the icon in order to copy its contents into a spreadsheet.) a. The expected rate of return for portfolio A is %. (Round to two decimal places.) The standard deviation of portfolio A is %. (Round to two decimal places.) b. The expected rate of return for portfolio B is %. (Round to two decimal places.) The standard deviation for portfolio B is %. (Round to two decimal places.) c. Based on the risk (as measured by the standard deviation) and return as measured by the expected rate of return of each stock, which investment is better? (Select the bext choice below.) OA. Portfolio A is better because it has a higher expected rate of return with more risk. B. Portfolio B is better because it has a lower expected rate of return with less risk. OC. Based on risk alone, portfolio B is better because it has lower risk; and based on return alone, portfolio A is better because it has a higher return K mputing the expected rate of return and risk) After a tumultuous period in the stock market, Logan Morgan is considering an investment in one of two portfolios. Given the information that follows, which investment is better, based on risk (as measured by the standard deviation) and return as measured by the expected rate of return? Portfolio A Portfolio B Probability 0.15 0.53 Return Probability Return - 1% 0.05 3% 0.32 20% 23% 0.25 9% 0.38 11% 0.32 16% (Click on the icon in order to copy its contents into a spreadsheet.) a. The expected rate of return for portfolio A is %. (Round to two decimal places.) The standard deviation of portfolio A is %. (Round to two decimal places.) b. The expected rate of return for portfolio B is %. (Round to two decimal places.) The standard deviation for portfolio B is %. (Round to two decimal places.) c. Based on the risk (as measured by the standard deviation) and return as measured by the expected rate of return of each stock, which investment is better? (Select the bext choice below.) OA. Portfolio A is better because it has a higher expected rate of return with more risk. B. Portfolio B is better because it has a lower expected rate of return with less risk. OC. Based on risk alone, portfolio B is better because it has lower risk; and based on return alone, portfolio A is better because it has a higher return
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
iHerb Inc. has several herb extractor evaporators that were purchased four years ago at a price of $20,000. These machines currently require annual maintenance costs of $2,000. However, the...
-
Compute 2011 interest expense for the following note: face, $4,000; 12 percent interest; date of note, April 1, 2011.
-
In a static firing test, a rocket is anchored to a rigid wall by a spring-damper system, as shown in Fig. 4.52(a). The thrust acting on the rocket reaches its maximum value \(F\) in a negligibly...
-
Why did people not obey Angie initially? Angie was an exceptional catheterization laboratory technician who was respected by her teammates. When the director of the cath lab took another job, Angie...
-
Park Co.s long-term available-for-sale portfolio at December 31, 2010, consists of the following. Park enters into the following long-term investment transactions during year 2011. Jan. 29 Sold 7,000...
-
Consider this differential equation for y : y(a:): dy _ 1+y2 dm 7 1+$2' (*) Find the general solution, and use it to complete parts (a)-(c) below. (a) Find the solution y(a:) for (*) that satisfies...
-
Asset A has an expected return of 20% and a standard deviation of 25%. The risk free rate is 10%. What is the risk-reward ratio? 0.65 1.35 0.55 1.25 I dont know what I'm missing.. this is the...
-
Adams, Peters, and Blake share profits and losses for their APB Partnership in a ratio of 2:3:5. When they decide to liquidate, the balance sheet is as follows: Assets Liabilities and Capital Cash $...
-
Bracken, Louden, and Menser, who share profits and losses in a ratio of 3:2:2, respectively are partners in a home decorating business that has not been able to generate the income the partners had...
-
The following case study is connected to the questions below: Please assist with answering the following questions in a synopsis format related to case study: Brief Overview of Client DSM Diagnosis...
-
Case 11-26 (Algo) Transfer Pricing; Divisional Performance [LO11-3] Weller Industries has six divisions. Its Electrical Division (which is operating at capacity) produces a variety of electrical...
-
Each question may have multiple correct answers. 1. [5pts] At t> 0, the voltage on the 0.5 F capacitor shown in Fig. Al has the form v(t) = -20e-1000t (V), The power for the capacitor at = 500 s...
-
how can you tell without doing any calculations that the mean birth rate is less than the median birth rate for these 54 african nations by looking at the box plot
-
Why did management adopt the new plan even though it provides a smaller expected number of exposures than the original plan recommended by the original linear programming model?
-
Determine product mix for retailer (Learning Objective 5) Vivace sells both designer and moderately priced fashion accessories. Top manage ment is deciding which product line to emphasize....
-
Identify constraint, then determine product mix (Learning Objective 5) Lifemaster produces two types of exercise treadmills: Regular and Deluxe. The exercise craze is such that Tifemaster could use...
-
Make-or-buy product component (Learning Objective 6) Fiber Systems manufactures an optical switch that it uses in its final product. Fiber Systems incurred the following manufacturing costs when it...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App