Question
In: Finance
You are expecting either a recession or steady growth next year. Recession has a 49% probability...
You are expecting either a recession or steady growth next year. Recession has a 49% probability of happening. In steady growth, stock ABC returns 9.00% and stock XYZ returns 6.00%. In a recession, stock ABC returns -5.00% and stock XYZ returns -2.80%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 31% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
a) 0.00271
b) 0.00278
c) 0.00284
d) 0.00291
e) 0.00298
Solutions
Expert Solution
Ans is a).0.00271
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jeff jeffy answered 1 year agoRelated Solutions
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