Question: please provide all steps/logic used to get to the answer :) its much appreciated! risk 2 1 -1 1 5% -1 0 Practice Question 2

please provide all steps/logic used to get to the answer :) its much appreciated!
please provide all steps/logic used to get to the answer :) its

risk 2 1 -1 1 5% -1 0 Practice Question 2 You plan to put your money into three types of assets: stocks, bonds and a cash money market account. Their expected returns and risks are given in the following table. Asset Expected Expected Covariate risks type return stocks bonds cash stocks 10% 2 0 bonds cash 1% 0 0 0 0 a. For each of the four portfolio allocations in the following table, compute its expected (weighted average) return, and its expected average and covariate risk. Write these values into the tnble below. For any additional or written calculations, please use the back of this page [12 marks] Option Stocks bonds cash expected return exp. avg. risk covariate risk 50% 50% 0% B: 50% 0% 50% C: 0% 50% 50% D: 33% 33% 33% A: b. Plot your results for each of the four portfolios in the following risk-return diagrams (e.g., put a dot and/or corresponding label A, B, C or D). You should have 4 dots in each diagram. [8 marks] expected return 5% B expected return 5% 3% 3% 1% 1% .13 HH 5 7 9 1.1 1.3 1.5 1.7 1.9 expected average risk .1 3 + H - .5 7 9 1.1 1.3 1.5 1.7 1.9 covariate risk c. Which of these portfolios are dominated, which portfolios are efficient, and which one would you choose yourself? Briefly explain your answers and own choice in 3-5 full sentences. (5 marks] risk 2 1 -1 1 5% -1 0 Practice Question 2 You plan to put your money into three types of assets: stocks, bonds and a cash money market account. Their expected returns and risks are given in the following table. Asset Expected Expected Covariate risks type return stocks bonds cash stocks 10% 2 0 bonds cash 1% 0 0 0 0 a. For each of the four portfolio allocations in the following table, compute its expected (weighted average) return, and its expected average and covariate risk. Write these values into the tnble below. For any additional or written calculations, please use the back of this page [12 marks] Option Stocks bonds cash expected return exp. avg. risk covariate risk 50% 50% 0% B: 50% 0% 50% C: 0% 50% 50% D: 33% 33% 33% A: b. Plot your results for each of the four portfolios in the following risk-return diagrams (e.g., put a dot and/or corresponding label A, B, C or D). You should have 4 dots in each diagram. [8 marks] expected return 5% B expected return 5% 3% 3% 1% 1% .13 HH 5 7 9 1.1 1.3 1.5 1.7 1.9 expected average risk .1 3 + H - .5 7 9 1.1 1.3 1.5 1.7 1.9 covariate risk c. Which of these portfolios are dominated, which portfolios are efficient, and which one would you choose yourself? Briefly explain your answers and own choice in 3-5 full sentences. (5 marks]

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!