You have been approached by Onua Do Ltd who wants to know how their portfolio is...

You have been approached by Onua Do Ltd who wants to know how their portfolio is fairing. The Company has over the years spread their funds in this order: 30% stock in A, 50% stock in B and the rest in stock C.
State of Economy
Probability
Stock A Return
Stock B Return
Stock C Return
Boom
0.10
24%
5%
14%
Normal
0.70
11%
6%
9%
Recession
0.20
-30%
7%
-5%
a). What is the standard deviation of their portfolio?
b). Explain the following and analyze how they affects trading decision(s) making and analysis of investments:
i) Snakebite effect
ii) House-money effect
iii) Endowment effect
iv) Disposition effect
v) Overconfidence

Solutions

Expert Solution

jeff jeffy answered 1 year ago

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