Question: You are given the following data about expected returns on a security on the LUSE where different states of the economy have the same probability
You are given the following data about expected returns on a security on the LUSE where different states of the economy have the same probability of occurrence: State Return Strong growth 9.0% Normal growth 6.5% Weak growth 2.5% Recession -4.5% Required: Compute and fully interpret the following for the investment: a) The Expected return for the security. [3 Marks] b) The volatility of the security returns using the semi deviation. [6 Marks] c) Evaluate the securitys performance assuming a benchmark target rate of 3.5%. [4 Marks] d) Explain the rationale behind the security performance evaluation method used in (c) above
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