In: Finance
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?