The stock has the following returns and probabilities of those returns. What is the expected return...

The stock has the following returns and probabilities of those returns. What is the expected return and risk of the stock using the data? Use your knowledge (weighted average of returns to calculate expected return and standard deviation of returns to calculate risk).

return	probability
6%	70%
15%	30%

Also, How do you calculate portfolio beta? I have this problem and have not been able to calculate the correct answer.

Using the table below what is the beta of the portfolio?

You have 50 shares of X; 80 shares of Y; 75 shares of Z

Stock	Price	Beta
X	$30	1.10
Y	$20	0.92
Z	$60	1.48

Expert Solution

Probabilty	Return	Probability* Return	Return- Expected Return[D]	ProbabilityDD
0.7	0.06	0.042	-0.027	0.0005103
0.3	0.15	0.045	0.063	0.0011907
	Expected Return = Sum of Probability*Return	0.087 = 8.7%	Variance =Sum of [ProbabilityDD]	0.001701
			Standard Deviation =Variance^1/2	0.041243181 = 4.1243%

Share Price	Number of Shares	Beta	Amount Invested [Share Price*Number of Shares]	Amount Invested* Beta
30	50	1.1	1500	1650
20	80	0.92	1600	1472
60	75	1.48	4500	6660
			7600	9782

	Portfolio Beta	=	Sum of (Amount Invested*Beta)/ Sum of Amount Invested =	9782/7600 =	1.287105263

jeff jeffy answered 2 years ago

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