Question
In: Finance
States Probability Asset M Return Asset N Return Asset O Return Boom 32% 13% 23% 5% ...
|
States |
Probability |
Asset M Return |
Asset N Return |
Asset O Return |
||||||
|
Boom |
32% |
13% |
23% |
5% |
||||||
|
Normal |
45% |
11% |
15% |
11% |
||||||
|
Recession |
23% |
5% |
3% |
13% |
||||||
a. What is the expected return of investing equally in all three assets M, N, and O?
- what is the expected return of investing in asset M alone?
- what is the standard deviation of the portfolio that invests equally in all three assets M, N, and O?
- what is the standard deviation of asset M?
- by investing in the portfolio that invests equally in all three assets M, N, and O rather than asset M alone, Sally can benefit by increasing her return by ___% and decrease her risk by ___%. (Round to 2 decimal places)
b. What is the expected return of a portfolio of 50% asset M and 50% asset N?
- what is the expected return of a portfolio 50% asset M and 50% asset O?
- what is the expected return of a portfolio 50% asset N and 50% asset O?
- what is the standard deviation of a portfolio of 50% asset M and 50% asset N?
- what is the standard deviation of a portfolio of 50% asset M and 50% asset O?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
States Probability Asset M Return Asset N Return Asset O Return Boom 34% 12% 21% 4%...
States
Probability
Asset M Return
Asset N Return
Asset O Return
Boom
34%
12%
21%
4%
Normal
51%
10%
14%
10%
Recession
15%
4%
1%
12%
Benefits of diversification. Sally Rogers has decided to invest
her wealth equally across the following three assets:
a. What are her expected returns and the risk from her
investment in the three assets? How do they compare with investing
in asset M alone?
Hint: Find the standard deviations of asset M and of the...
States Probability Asset M Return Asset N Return Asset O Return Boom 27% 10% 21% 2% ...
States
Probability
Asset M Return
Asset N Return
Asset O Return
Boom
27%
10%
21%
2%
Normal
50%
8%
12%
8%
Recession
23%
2%
1%
10%
a. What is the expected return of investing equally in
all three assets M, N, O?
b. What is the expected return of investing in asset M
alone?
c. What is the standard deviation of the portfolio that
invests equally in all three assets?
d. What is he standard deviation of asset
M?
states econ, probability, Asset J, AssetK, Asset L boom. 0.29. 0.055. 0.190
states econ, probability, Asset J,
AssetK, Asset L
boom.
0.29.
0.055. 0.190.
0.280
growth.
0.36. 0
055. 0.100.
0.190
Stagnant.
0.22.
0.055. 0 040.
0.050
Recession.
0.13.
0.055. -0.080.
-0.180
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 9%
in asset K, and 43% in asset L?
D) what is the portfolio's variance and standard
deviation using...
expected return and standard deviation. stateecon, probability, asset A, asset B, Asset C boom. 0.34. 0.02. &nbs
expected return and standard deviation.
stateecon, probability, asset A, asset B, Asset
C
boom.
0.34.
0.02.
0.22. 0.34
normal.
0.52.
0.02.
0.05. 0.18
recession.
0.14.
0.02.
-0.01. -0.25
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?
1. An asset is forecast to have a return of 30% with a probability of .5...
1. An asset is forecast to have a return of 30% with a
probability of .5 (50%) and a return of 10% with a probability of
.5 (50%). The expected return is 20%. What is the variance of the
returns?
a) 0
b) none of these
c) 0.1
d) 0.01
2. An asset has a variance of .0009. The standard
deviation of the asset is:
a) 0
b) 0.3
c) 0.003
d) 0.03
3. Which of the following would typically...
If the expected return on a risky asset is 13%, standard deviation is 25%, and the risk free asset 5%.
If the expected return on a risky asset is 13%, standard
deviation is 25%, and the risk free asset 5%.Calculate the expected return , standard deviation, sharp ratio for the complete portfolio with y= .60
State of Economy Probability of State Return on Asset A in State Return on Asset B...
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
0.35
0.04
0.21
0.3
Normal
0.5
0.04
0.08
0.2
Recession
0.15
0.04
-0.01
-0.26
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?
The probability of state in boom economy is 20%. The rate of stock return is 20%...
The probability of state in boom economy is 20%. The rate of
stock return is 20% and the bond rate of return is 10%.
The probability of state in normal good growth economy is 25%.
The stock rate of return is 10% and the bond rate of return is
5%
The probability of state in normal growth economy is 15%. The
stock rate of return is 3% and the bond rate of return is 5%
The probability of state in...
State of Economy Probability of State Return on Asset J in State Return on Asset K...
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
0.26
0.050
0.230
0.290
Growth
0.37
0.050
0.150
0.210
Stagnant
0.22
0.050
0.020
0.050
Recession
0.15
0.050
−0.150
-0.180
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 12% in
asset J, 48%...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a...
Suppose an economy has three states: boom, normal, and
recession. Assume that the probability of a boom state is 0.2, a
normal state is 0.5, and a recession state is 0.3. And there are
three stocks in this economy, called Alpha, Beta, and Gamma
respectively. The return performance of these stocks has been
summarized by the following table:
Alpha
Beta
Gamma
boom
15%
28%
1%
normal
6%
12%
3%
recession
-12%
-30%
20%
(Please show your intermediate processes, instead of...
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