Question
In: Finance
Use the following scenario analysis for stocks X and Y to answer the questions. Bear Normal...
Use the following scenario analysis for stocks X and Y to answer the questions.
| Bear | Normal | Bull | |
| Market | Market | Market | |
| Probability | 20.00% | 45.00% | 35.00% |
| Stock X | -13.00% | 11.00% | 28.00% |
| Stock Y | -26.00% | 16.00% | 46.00% |
Assume you have a $200,000 portfolio and you invest $75,000 in stock X and the remainder in stock Y. What is the expected return for this portfolio?
Solutions
Expert Solution
| Probability (P) | Stock X (Xi) | Xi * P | Stock Y (Yi) | Yi * P |
| 20% | -13 | -2.6 | -26 | -5.2 |
| 45% | 11 | 4.95 | 16 | 7.2 |
| 35% | 28 | 9.8 | 46 | 16.1 |
| 12.15 | 18.1 | |||
| Therefore, | ||||
| Expected return of Stock X = 12.15% | ||||
| Expected return of Stock Y = 18.1% | ||||
| If $75000 out of $200000 is invested in Stock X and the remainder in Stock Y, | ||||
| Expected return of this portflio = 12.15 * ($75000/$200000) + 18.1 ($125000/$200000) | ||||
| = 4.56 + 11.31 | ||||
| = 15.87% |
jeff jeffy answered 1 year agoRelated Solutions
Use the following scenario analysis for stocks X and Y to answer the questions. Bear Normal...
Use the following scenario analysis for stocks X and Y to answer
the questions.
Bear
Normal
Bull
Market
Market
Market
Probability
35.00%
55.00%
10.00%
Stock X
-28.00%
9.00%
30.00%
Stock Y
-16.00%
15.00%
50.00%
Assume you have a $200,000 portfolio and you invest $80,000 in
stock X and the remainder in stock Y. If the risk–free rate of
return is 3.75%, and we assume that the standard deviation of the
excess returns on the portfolio is 15%, what is the...
Consider the following scenario analysis: Rate of Return Scenario Recession Normal Boom Probability Stocks Bonds .2...
Consider the following scenario analysis:
Rate of Return
Scenario Recession Normal Boom
Probability Stocks Bonds .2 -10% +14% .6 +15 +8
.2 +25 +3
Calculate the expected rate of return of stocks and bonds
Calculate the standard deviation of each investment
If you own 60% stocks and 40% bonds, what are your expected
returns?
If you own 60% stocks and 40% bonds, what is your standard
deviation?
Would you prefer to invest in the combined portfolio, stocks only,
or bonds...
1. Use the following data to answer the questions below. Show your work (x-mx^2 x y...
1. Use the following data to answer the questions below. Show
your work
(x-mx^2
x
y
(y-my)^2
(x-m)(y-m)
9
8
9
16
12
9
2
5
0
0
16
1
5
0
0
9
2
8
9
-9
16
9
2
9
-12
9
8
1
16
-12
Sum 68
5
5
Sum 50
Sum -21
x
y
8
9
2
5
1
5
2
8
9
2
8
1
What is the covariance between Y and X
What is...
Use the following scenario to answer the questions below: A campaign manager for a local politician...
Use the following scenario to answer the questions below:
A campaign manager for a local politician is interested in the
percentage of Leon County residents who intend to vote in the 2020
elections in November. Residents from each neighborhood in Leon
County are randomly sampled. Using simple random sample techniques,
larger neighborhoods have a larger number of residents randomly
sampled and smaller neighborhoods have a smaller number of
residents randomly sampled to get a representative sample.
Altogether 434 Leon County...
Use the following scenario and data to answer questions 12.1 – 12.5. A researcher is interested...
Use the following scenario and data to answer questions
12.1 – 12.5. A researcher is interested in how many days
it takes athletes to recover from jet lag when they have had to fly
a long distance. It is commonly known that traveling east (moving
“ahead” in time) leads to more serious jet lag than travelling
west. The researcher finds 18 professional athletes who just
travelled a long distance; six stayed in the same time zone, six
travelled west, and...
Consider the utility function, U(x,y) = ln(x) + y. Please answer the following questions, showing all...
Consider the utility function, U(x,y) = ln(x) + y. Please answer
the following questions, showing all work. (1) Derive an expression
showing the overall effect of an increase in py on the quantity of
y consumed, holding constant px and income (I). (2) Now, show how
that overall effect in (1) can be decomposed into a separate
substitution effect and income effect. Show these effects
explicitly. (3) Now, do the same for x: derive an expression
showing the overall effect...
Case Study Analysis Read carefully the following case/scenario and answer the questions given at the end....
Case Study Analysis
Read carefully the following case/scenario and answer the
questions given at the end.
A manufacturing company, involved in the business of food
processing, faces a technical problem
at one of their major plants. Recently they faced a technical issue
which resulted in loss of
production and was fixed by engaging their mechanical staff. Now
this technical problem can result
in even bigger loss of production and if it gains attention of
public through social or electronic
media,...
Directions: Use the Crosstabs option in the Descriptives menu to answer the questions based on the following scenario.
Directions: Use the Crosstabs option in the Descriptives menu to answer the questions based on the following scenario. (Be sure to select Chi-square from the Statistics submenu and Observed, Expected, Row, and Column in the Cells submenu. Assume a level of significance of .05) The school district recently adopted the use of e-textbooks, and the superintendent is interested in determining the level of satisfaction with e-textbooks among students and if there is a relationship between the level of satisfaction...
Use the following scenario to answer the next eight questions: Rosa and Dirk produce basketballs and...
Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce
six basketballs per hour or two footballs per hour. Dirk can
produce three basketballs per hour or four footballs per hour.
Based on the scenario, which of the following is true?
1. Rosa has both an absolute and a comparative advantage in
basketball production.
2. Rosa has neither an absolute nor a comparative advantage in
football production.
3. Dirk has...
Use the following information regarding a variable (Y) and a variable (X) to answer the next...
Use the following information regarding a variable (Y) and a
variable (X) to answer the next 7 questions. n = 8 ∑ x = 56 ∑ y =
296 ∑ x 2 = 428 ∑ y 2 = 11,920 ∑ xy = 2,257 The sample covariance
equals -9.17 12.12 9.17 26.43 Refer to above data. The sample
correlation coefficient equals: a. .991 b. 1.67 c. .85 d. -0.94
Refer to above data.
The sample correlation coefficient equals:
a.
.991
b....
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- Java. If possible please put explanations for each line of code. Write a test program that...
- . Use the following information to calculate your company's expected return State Probability Return Boom 20%...
- You are considering the following two projects and can only take one. Your cost of capital...
- C++: Write a program that produces truth tables for the following compound propositions. Write the header...
- 1. What is the historical role of investment bankers ? Has this role changed ? Why...
- How were the original Internet requirements met through its design? What are the two main requirements...
ADVERTISEMENT