Question: Suppose that in one year only three possible outcomes can take place. In each one of those possible scenarios the return of the stock

Suppose that in one year only three possible outcomes can take place. In each one of those possible scenarios the return of the stock of the companies Spin and Bang will take the following values with the indicated probabilities: Probabilitie Spin Bang S 0,1 0,2 0,7 0,09 -0,03 0,37 0,15 0,10 0,27 Suppose that you would like to invest in a portfolio of the two and your investment wealth is equal to 100,000 SEK. You would like to allocate 35,000 SEK to Spin and the rest will be invested in Bang. What will be the expected return of your portfolio?

Step by Step Solution

★★★★★

3.48 Rating (145 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the expected return of your portfolio you need to multiply ... View full answer

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 Accounting Questions!

Lori Harpoolian (John's sister) had the steely blue eyes that seemed to be a prerequisite for high priced corporate attorneys. Those eyes would bore into the soul of her managerial victims, forcing...

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...

There are three assets, A, B and C, where A is the market portfolio and C is the risk-free asset. The return on the market has a mean of 12% and a standard deviation of 20%. The risk-free asset...

You have just graduated from the MBA program of a large university, and one of your favorite courses was Todays Entrepreneurs. In fact, you enjoyed it so much you have decided you want to be your own...

Clarify all steps in the calculations a) What is the lowest possible standard deviation that can be obtained by creating a portfolio of two stocks whose return has a correlation equal to -1? b)...

18. Expected return of a portfolio Suppose that in one year only three possible outcomes can take place. In each one of those possible scenarios the return of the stock of the companies Spin and Bang...

hello what is the answer to both?? Question 1 A given company has the following projected FCF'S: End of Year FCF (Millions SEK) Suppose that the weighted average cost of capital is equal to 5% and...

Identify, describe, and, explain the functions of HRM in a family organization that is diversifying and having manpower challenges while they are transitioning to a corporate-run organization....

Question 10 Suppose that in one year only three possible outcomes can take place. In each one of those possible scenarios the return of the stock of the companies Spin and Bang will take the...

COMM 215: BUSINESS STATISTICS REVIEW PROBLEMS 1 Descriptive Statistics 1. The listing below gives the service window of A&W: 4.91 0.85 0.52 2.51 1.92 2.66 1.94 5.19 2.33 3.51 2.95 2.62 service times...

ALL THE QUESTIONS (1,2,3). Thanks! 1. (40 pts) Ratchets.com anticipates that it will need $ 15 million in venture capital to achieve a terminal value of $ 300 million in five years. A. (5 pts)...

If given attribute X in a dataset has 150 N (No) and 350 Y (yes) values and 135 out of the 150 N correspond to the H label while only 65 out of the 350 correspond to the H label. Compute the gini...

Assume that you have been given the responsibility to invest some funds in the stock market to provide an annuity to an individual who has just retired. Explain how you might use the dividend yield...

What is Cultivating Mindful leadership, integrating mindfulness practices ( Hougaard & Carter, 2 0 1 8 ) . Includes reference book?

Discuss the role of personal selling in the promotion mix. In what situations is it more effective than advertising?

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 900,000 shares of stock outstanding. Under Plan...

Anteium Company owes $80,000 on a note payable that is currently due. The note is held by a local bank and is secured by a mortgage lien attached to three acres of land worth $48,000. The land...

Net Present Value Method, Internal Rate of Return Method, and Analysis.The management of Saturn Networks Inc. is considering two capital investment projects. The estimated net cash flows from each...

1. Calculate the projected return on the house for the next year and give your recommendation. 2. Finish the nonfinancial investments section of this case, which includes the topics described in the...

Grade 12 Calculus, Unit DerivativesDetermine the derivative of the following functions.1.y=6x3+1+19x+152.y=x3-19x23.y=(x-1)3182-x22

Consider again, as in exercise 27.11, the political incentives for legislators that represent districts. In exercise 27.11, we considered pork barrel projects as publicly funded private goods that...

Compensating Wage Differentials and Increased Worker Safety: Why would any worker choose to work in a profession (like coal mining) that is risky for the workers health and safety? The answer is that...

Consider again the end-of-chapter problem 8.9 about the impact of international trade on child labor in the developing world. A: Suppose again that households have non-child income Y , that children...

Discussion Questions: 1. You will recall that McDonalds vice president of U.S. Menu Management, Wade Thomas, indicated that McDonalds relied heavily on statistical data to determine, in part, if its...

The Oregonian newspaper has asked readers to e-mail and respond to the question, Do you believe police officers are using too much force in routine traffic stops? a. Would the results of this survey...

In a survey conducted by AIG, investors were asked to rate how knowledgeable they felt they were as investors. Both online and traditional investors were included in the survey. The survey resulted...