Question
In: Finance
You have a portfolio which is comprised of 30 percent of stock A and 70 percent...
You have a portfolio which is comprised of 30 percent of stock A and 70 percent of stock B. What is the portfolio standard deviation?
|
State of the Economy |
Probability |
E(R) A |
E(R) B |
||
|
30% |
70% |
||||
|
Boom |
0.15 |
20.00 |
14.00 |
||
|
Normal |
0.75 |
11.00 |
9.00 |
||
|
Recession |
0.10 |
-23.00 |
-5.00 |
||
| A. |
6.68% |
|
| B. |
6.82% |
|
| C. |
7.47% |
|
| D. |
4.00% |
|
| E. |
5.56% |
The answer is not C.
Solutions
Expert Solution
Answer to the Question is Option "A"
Detailed Answer Attached:
jeff jeffy answered 2 years agoRelated Solutions
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State of Economy
Probability of State
Return if State Occurs
of Economy
Stock A
Stock B
Stock C
Recession
.17
-
18.8
%
-
3.9
%
-
22.8
%
Normal
.45
10.2
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8.5
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17.1
%
Boom
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15.8
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31.7...
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Probability of State
Return if State Occurs
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Stock A
Stock B
Stock C
Recession
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−
10.10%
−
3.50%
−
12.50%
Normal
.665
9.40%
10.66%
16.90%
Boom
.221
21.55%
25.11%
29.81%
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15
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Portfolio
Average Return
Standard Deviation
Beta
A
18.9
%
21.6
%
1.92
B
13.2
12.8
1.27
The risk-free rate is 3.1 percent and the market risk premium
is 6.8 percent.
2.04 percent
0.47 percent
1.08 percent
1.46 percent
−1.25 percent
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$
(1,095,000
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623,000
663,000
Depreciation and amortization
113,000
146,000
Gain on sale of building
0
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)
Interest expense
53,000
53,000
Consolidated net income
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)
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)
to noncontrolling interest
32,000
34,000
to parent company
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Bolero Company holds 70 percent of the common stock of Rivera, Inc., and 30 percent of...
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following consolidated financial statements are for 2017 and
2018:
2017
2018
Revenues
$
(965,000
)
$
(1,095,000
)
Cost of goods sold
623,000
663,000
Depreciation and amortization
113,000
146,000
Gain on sale of building
0
(43,000
)
Interest expense
53,000
53,000
Consolidated net income
(176,000
)
(276,000
)
to noncontrolling interest
32,000
34,000
to parent company
$
(144,000
)...
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