Question
In: Accounting
Expected return and standard deviation. Use the following information to answer the questions: a. What is...
Expected return and standard deviation. Use the following information to answer the questions:
a. What is the expected return of each asset?
b. What is the variance and the standard deviation of each asset?
c. What is the expected return of a portfolio with 8% in asset J, 46% in asset K, and 46% in asset L?
d. What is the portfolio's variance and standard deviation using the same asset weights from part (c)?
| State of Economy | Probability of State | Return on Asset J in State | Return on Asset K in State | Return on Asset L in State |
| Boom | 0.28 | 0.05 | 0.22 | 0.3 |
| Growth | 0.39 | 0.05 | 0.12 | 0.23 |
| Stagnant | 0.23 | 0.05 | 0.06 | 0.09 |
| Recession | 0.1 | 0.05 | -0.07 | -0.2 |
Solutions
Expert Solution
Hi Friend,
please find attached the answer to your question.
Imp Note: In Part C, the portfolio is a mixture of stock J, K, L but you haven't attached the details of stock l. Therefore, I am solving the question by taking weights *% in K & 92% in K. But, if you find the returns of Stock L, Please follow the same method for the calculation of Portfolio Return, Variance, and Standard Deviation.
ekkarill92 answered 1 year agoRelated Solutions
Expected return and standard deviation. Use the following information to answer the questions: a. What is...
Expected return and standard deviation. Use the following
information to answer the questions:
a. What is the expected return of each asset?
b. What is the variance of each asset?
c. What is the standard deviation of each asset?
State of Economy Probability of State
Return on Asset A in State Return on Asset B in
State Return on Asset C in State
Boom 0.31 0.02 0.25 0.31
Normal 0.48 0.02 0.06 0.17
Recession 0.21 0.02 -0.04 -0.24...
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard deviation. Use
the following information to answer the questions.
State of
Economy
Probability
of State
Return on
Asset R in
State
Return on
Asset S in
State
Return on
Asset T in
State
Boom
0.29
0.035
0.300
0.470
Growth
0.36
0.035
0.140
0.330
Stagnant
0.21
0.035
0.180
0.035
Recession
0.14
0.035
−0.035
−0.160
a. What is the expected return of each
asset?
b. What are the variance and the standard
deviation of each asset?
c. What...
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard deviation.
Use the following information to answer the questions.
State of
Economy
Probability
of State
Return on Asset J in
State
Return on Asset K in
State
Return on Asset L in
State
Boom
0.24
0.055
0.210
0.290
Growth
0.38
0.055
0.130
0.190
Stagnant
0.22
0.055
0.030
0.070
Recession
0.16
0.055
−0.090
−0.220
a. What is the expected return of each asset?
b. What is the variance and the standard deviation of each
asset?
c. What...
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard deviation.
Use the following information to answer the questions.
State of
Economy
Probability
of State
Return on
Asset R in
State
Return on
Asset S in
State
Return on
Asset T in
State
Boom
0.29
0.020
0.300
0.450
Growth
0.38
0.020
0.140
0.300
Stagnant
0.22
0.020
0.170
0.015
Recession
0.11
0.020
−0.030
−0.165
a. What is the expected return of each asset?
b. What are the variance and the standard deviation of each
asset?
c. What...
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard
deviation.
Use the following information to answer the questions.
State of
Economy
Probability
of State
Return on
Asset J in
State
Return on
Asset K in
State
Return on
Asset L in
State
Boom
0.25
0.065
0.230
0.260
Growth
0.36
0.065
0.140
0.210
Stagnant
0.23
0.065
0.065
0.055
Recession
0.16
0.065
-0.080
−0.210
a. What is the expected return of asset J?
_____
(Round to four decimal places.)
What is the expected return of asset K?...
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard deviation.
Use the following information to answer the questions.
State of
Economy
Probability
of State
Return on
Asset A in
State
Return on
Asset B in
State
Return on
Asset C in
State
Boom
0.34
0.02
0.22
0.35
Normal
0.52
0.02
0.09
0.23
Recession
0.14
0.02
−0.02
−0.21
a. What is the expected return of each asset?
b. What is the variance of each asset?
c. What is the standard deviation of each asset?
Hint: Make...
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard deviation.
Use the following information to answer the questions.
State of
Economy
Probability
of State
Return on
Asset D in
State
Return on
Asset E in
State
Return on
Asset F in
State
Boom
0.34
0.07
0.29
0.17
Normal
0.54
0.07
0.19
0.13
Recession
0.12
0.07
−0.24
−0.05
a. What is the expected return of each asset?
b. What is the variance of each asset?
c. What is the standard deviation of each asset?
Expected return and standard deviation. Use the following information to answer the questions. State of Economy...
Expected return and standard
deviation.
Use the following information to answer the questions.
State of
Economy
Probability
of State
Return on
Asset D in
State
Return on
Asset E in
State
Return on
Asset F in
State
Boom
0.38
0.08
0.31
0.19
Normal
0.48
0.08
0.17
0.13
Recession
0.14
0.08
−0.22
- 0.04
a. What is the expected return of each asset?
b. What is the variance of each asset?
c. What is the standard deviation of each asset?
Hint:...
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return
and standard deviation of a portfolio that is 30 percent invested
in 3 Doors, Inc., and 70 percent invested in Down Co.
3 Doors, Inc
Down Co
Expected Return, E(R)
18%
14%
Standard deviation
48
50
Correlation .33
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return
and standard deviation of a portfolio that is 50 percent invested
in 3 Doors, Inc., and 50 percent invested in Down Co.: (Do
not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
3 Doors, Inc.
Down Co.
Expected return, E(R)
14
%
10
%
Standard deviation, σ
42
31
Correlation
0.10
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