Question

In: Finance

You are expecting either a recession or steady growth next year. Recession has a 29% probability...

You are expecting either a recession or steady growth next year. Recession has a 29% probability of happening. In steady growth, stock ABC returns 11.50% and stock XYZ returns 8.50%. In a recession, stock ABC returns -6.00% and stock XYZ returns -3.80%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 51% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?

0.00449

0.00460

0.00472

0.00483

0.00495

Solutions

Expert Solution

The answer is b)


Related Solutions

You are expecting either a recession or steady growth next year. Recession has a 11% probability...
You are expecting either a recession or steady growth next year. Recession has a 11% probability of happening. In steady growth, stock ABC returns 13.75% and stock XYZ returns 10.75%. In a recession, stock ABC returns -6.90% and stock XYZ returns -4.70%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 69% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 25% probability...
You are expecting either a recession or steady growth next year. Recession has a 25% probability of happening. In steady growth, stock ABC returns 12.00% and stock XYZ returns 9.00%. In a recession, stock ABC returns -6.20% and stock XYZ returns -4.00%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 55% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
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?...
You are expecting either a recession or steady growth next year. Recession has a 31% probability...
You are expecting either a recession or steady growth next year. Recession has a 31% probability of happening. In steady growth, stock ABC returns 11.25% and stock XYZ returns 8.25%. In a recession, stock ABC returns -5.90% and stock XYZ returns -3.70%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 49% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 25% probability...
You are expecting either a recession or steady growth next year. Recession has a 25% probability of happening. In steady growth, stock ABC returns 12.00% and stock XYZ returns 9.00%. In a recession, stock ABC returns -6.20% and stock XYZ returns -4.00%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 55% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 19% probability...
You are expecting either a recession or steady growth next year. Recession has a 19% probability of happening. In steady growth, stock ABC returns 12.75% and stock XYZ returns 9.75%. In a recession, stock ABC returns -6.50% and stock XYZ returns -4.30%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 61% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
You are expecting either a recession or steady growth next year. Recession has a 33% probability...
You are expecting either a recession or steady growth next year. Recession has a 33% probability of happening. In steady growth, stock ABC returns 11.00% and stock XYZ returns 8.00%. In a recession, stock ABC returns -5.80% and stock XYZ returns -3.60%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 47% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 41% probability...
You are expecting either a recession or steady growth next year. Recession has a 41% probability of happening. In steady growth, stock ABC returns 10.00% and stock XYZ returns 7.00%. In a recession, stock ABC returns -5.40% and stock XYZ returns -3.20%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 39% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
You are expecting either a recession or steady growth next year. Recession has a 19% probability...
You are expecting either a recession or steady growth next year. Recession has a 19% probability of happening. In steady growth, stock ABC returns 12.75% and stock XYZ returns 9.75%. In a recession, stock ABC returns -6.50% and stock XYZ returns -4.30%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 61% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?
14.You are expecting either a recession or steady growth next year. Recession has a 47% probability...
14.You are expecting either a recession or steady growth next year. Recession has a 47% probability of happening. In steady growth, stock ABC returns 9.25% and stock XYZ returns 6.25%. In a recession, stock ABC returns -5.10% and stock XYZ returns -2.90%. You are going to put together a portfolio of these two stocks with positive portfolio weight in each and allocate 33% of the portfolio to ABC with the remainder to XYZ. What is the variance of the portfolio?...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT