In: Finance
Use the following table to answer questions 1 - 6:
State of Economy |
Probability of State of Economy |
Asset A Rate of Return |
Asset B Rate of Return |
Boom |
0.3 |
0.13 |
0.08 |
Normal |
0.5 |
0.06 |
0.05 |
Recession |
0.2 |
-0.05 |
-0.01 |
What is the expected return for asset A?
What is the expected return for asset B?
What is the standard deviation for asset A?
What is the standard deviation for asset B?
What is the expected return of a portfolio that has 70% in Asset A and 30% in Asset B?
The standard deviation of the 70% A and 30% B portfolio most likely should:
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Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -