Using the following information, calculate the expected return and standard deviation of a portfolio with 50 percent in ABC and 50 percent in DEF Then calculate the expected return and standard deviation of a portfolio where you invest 30 percent in ABC, 30 percent in DEF, and the rest in T bills with a return of 2 5percent State of the economy Probability ABC stock return ( ) DEF stock return ( ) Depression Recession Normal Boom 5 0 15 0 2 0 4 0 25 6 8 10

Question: Using the following information, calculate the expected return and standard deviation of a portfolio with 50 percent in ABC and 50 percent in DEF. Then

Using the following information, calculate the and standard deviation of a with 50 percent in ABC and 50 percent in DEF. Then calculate the and standard deviation of a where you invest 30 percent in ABC, 30 percent in DEF, and the rest in T-bills with a return of 2.5percent.

State of the economy | Probability | ABC stock return (%) DEF stock return (%) Depression Recession Normal Boom 5 0.15 0.2 0.4 0.25 6 8 10

Step by Step Solution

★★★★★

3.51 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

ER ABC 0155 0203 0405 0258 075 06 2 2 265 ER DEF 0157 0200 0406 02510 105 00 24 25 385 ER p 05265 05... 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

Document Format (1 attachment)

413-B-C-F-R-A-R (621).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

The (annual) expected return and standard deviation of returns for 2 assets are as follows: Asset A : E[r] 10% , SD[r] 30% Asset B : E[r] 20% , SD[r] 50% The correlation between the returns is 0.15...

Calculate the expected return and standard deviation for an investment with the following probability distribution. Return (%) Probability (%) -10 20 5 20 10 20 17 30 26 10 Expected return Standard...

You are given the expected return and standard deviation of Asset 1 and Asset 2: E(R1) = 10%, 1 = 10% E(R2) = 14%, 2 = 16% The correlation between the two assets is p = 0.2. a. Calculate the expected...

Using the following information, calculate the expected return and standard deviation of a portfolio with 50 percent in ABC and 50 percent in DEF. Then calculate the expected return and standard...

please answer the following questions. thank you. ................................................................. . all the information are given in the picture J 1.At the beginning of last year...

Using the following information, calculate the expected return and standard deviation of a portfolio with 50 percent in ABC and 50 percent in DEF. Then calculate the expected return and standard...

Using the following information, calculate the expected return and standard deviation of a portfolio with 50 percent in Pina and 50 percent in Grouper. (Round intermediate calculations to 4 decimal...

if correct me and my friends will like! Problem 11-11 Portfolio Returns and Volatilities (LO2, CFA5) Given the following information, calculate the expected return and standard deviation for a...

Given the following information, calculate the expected return and standard deviation for a portfolio that has 32 percent invested in Stock A, 31 percent in Stock B, and the balance in Stock C. Note:...

Given the following information, calculate the expected return and standard deviation for a portfolio that has 40 percent invested in Stock A, 41 percent in Stock B, and the balance in Stock C. (Do...

Refer to the data in PE 7-15. Determine (1) The cost of goods sold for the month and (2) The ending inventory balance for October 31 using the FIFO cost flow assumption. Data from PE 7-15 Pearcy...

b) In a large hall, a pendulum is to be made by suspending a 40-kg ball from the end of steel wire 15m long. Tensile strength of steel is 0.48 x 10 Pa. and Y is 200 x 10 Pa. a) What cross-sectional...

The cost formula for a company can be modeled by Cwhere represents the number of items made A formula for the companys income is modeled with where is the number of items sold A company will break...

Hines (1991, p. 313) stresses a view that financial accounting practices are implicated in the construction and reproduction of the social world. What does Hines mean by this statement? Do you agree...

Compute the Z score for Giant Motors Corporation (GMC) given the following information for year-end 2012: At what share price would GMC have a Z score equal to 3.00? How does the future look for GMC?...

Compute the Z score for Central Manufacturing Corporation (CMC) given the following information for year-end 2012: Based on its Z score, is CMC likely to go bankrupt in the near future? CMC Financial...

Compute the Z score for FAST Motor Company given the following information for year-end 2012: What proportion (measured as a percentage) of the Z score is composed of 0.60(X4)? Is FAST likely to go...

2. Why was the evidence from Figure 1 (along with the shift pattern of Ms. Gilbert) not conclusive evidence that Ms. Gilbert was guilty of the excess deaths? Suggest an explanation that could have...

10. Rose Axels faces a smooth annual demand for cash of $5.16 million, incurs transaction costs of $269 every time the company sells marketable securities, and can earn 3.7 percent on its marketable...

Question 27 (5 points) You want to create a portfollo equally as risky as the market, and you have $250,000 to invest. Given this information, fill in the three missing pleces d information in the...