You have done your research for the following investments and your friend has provided their expectations...

You have done your research for the following investments and your friend has provided their expectations for the markets for next year.

State of Economy	Probability of State of Economy	Stock A	Stock B	Stock C	Stock D	T-bills	Stock Market
Boom	.30	20%	25%	20%	-10%	3%	20%
Normal	.40	15%	12%	16%	15%	3%	15%
Recession	.30	-16%	-15%	-8%	25%	3%	-8%

Calculate the risk for stock A.
Calculate the risk for stock B.
Calculate the risk for stock C.
Calculate the risk for stock D.
Calculate the risk for T-bills.
Calculate the risk for the stock market.

Solutions

Expert Solution

a. risk for stock A = 15.33%
b. risk for stock B = 15.87%
c. risk for stock C = 11.90%
d. risk for stock D = 14.045
e. risk for T-bills = 0%
f. risk for stock market = 11.71%

Please do rate me and mention doubts, if any, in the comments section.

jeff jeffy answered 1 year ago

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