Question
In: Finance
Given the following information, calculate the expected return and standard deviation for a portfolio that has...
Given the following information, calculate the expected return and standard deviation for a portfolio that has 25 percent invested in Stock A, 32 percent in Stock B, and the balance in Stock C. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
| Returns | ||||||||||||
| State of Economy | Probability of State of Economy | Stock A | Stock B | Stock C | ||||||||
| Boom | 0.30 | 10 | % | 19 | % | 20 | % | |||||
| Bust | 0.70 | 11 | 0 | −11 | ||||||||
|
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Given the following information, calculate the expected return and standard deviation for a portfolio that has...
Given the following information, calculate the expected return
and standard deviation for a portfolio that has 50 percent invested
in Stock A, 20 percent in Stock B, and the balance in Stock C.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places.)
Returns
State of
Economy
Probability of
State of Economy
Stock A
Stock B
Stock C
Boom
.80
15
%
18
%
25
%
Bust
.20
16
0
−16
Expected return:__________%
Standard...
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return
and standard deviation of a portfolio that is 30 percent invested
in 3 Doors, Inc., and 70 percent invested in Down Co.
3 Doors, Inc
Down Co
Expected Return, E(R)
18%
14%
Standard deviation
48
50
Correlation .33
Use the following information to calculate the expected return and standard deviation of a portfolio that...
Use the following information to calculate the expected return
and standard deviation of a portfolio that is 50 percent invested
in 3 Doors, Inc., and 50 percent invested in Down Co.: (Do
not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
3 Doors, Inc.
Down Co.
Expected return, E(R)
14
%
10
%
Standard deviation, σ
42
31
Correlation
0.10
Using the following information, calculate the expected return and standard deviation of a portfolio with 50...
Using the following information, calculate the expected return
and standard deviation of a portfolio with 50 percent in ABC and 50
percent in DEF. Then calculate the expected return and standard
deviation of a portfolio where you invest 40 percent in ABC, 40
percent in DEF, and the rest in T-bills with a return of 3.5
percent.
State of the Economy
Probability
ABC Stock Return (%)
DEF Stock Return (%)
Depression
0.1
-5
-7
Recession
0.2
-2
2
Normal
0.4...
Calculate the expected return and standard deviation of the portfolio.
A portfolio consists of two stocks:
Stock Expected Return Standard Deviation Weight
Stock 1 10% 15% 0.30
Stock 2 13% 20% ???
The correlation between the two stocks’ return is 0.50
Calculate the expected return and standard deviation of the portfolio.
Expected Return:
Standard Deviation:
(i) Briefly explain, in general, when there would be “benefits of diversification” (for any portfolio of two securities).
(ii) Describe whether the above portfolio would...
Covariance and Correlation Based on the following information, calculate the expected return and standard deviation of...
Covariance and Correlation Based on the following information,
calculate the expected return and standard deviation of each of the
following stocks. Assume each state of the economy is equally
likely to happen. What are the covariance and correlation between
the returns of the two stocks?
STATE OF ECONOMY
RETURN ON STOCK A
RETURN ON STOCK B
Bear
Normal
Bull
-.032
.124
.193
-.103
-.025
.469
Covariance and Correlation Based on the following information, calculate the expected return and standard deviation of...
Covariance and Correlation Based on the following information,
calculate the expected return and standard deviation of each of the
following stocks. Assume each state of the economy is equally
likely to happen. What are the covariance and correlation between
the returns of the two stocks?
STATE OF ECONOMY
RETURN ON STOCK A
RETURN ON STOCK B
Bear
Normal
Bull
-.032
.124
.193
-.103
-.025
.469
Calculate the expected return and standard deviation of a portfolio comprised of $4,500 invested in stock...
Calculate the expected return and standard deviation of a
portfolio comprised of $4,500 invested in stock S and $3,000
invested in stock T.
State of Economy
Probability of State of Economy
Rate of Return if State Occurs (Stock S)
Rate of Return if State Occurs (Stock T)
Boom
10%
12%
4%
Normal
65%
9%
6%
Recession
25%
2%
9%
Given the following information: Expected return on Stock A .15 (15%) Standard deviation of return 0.3...
Given the following
information:
Expected return on Stock A
.15 (15%)
Standard deviation of return
0.3
Expected return on Stock B
.18 (18%)
Standard deviation of return
0.4
Correlation coefficient of the returns
on Stock A and Stock B
0.75
a. What are the expected returns and
standard deviations of the following
portfolios?
1. 100 percent of funds invested in
Stock A
2. 100 percent of funds invested in Stock B
3. 50 percent of funds invested in each stock?...
Given the following information: Expected return on Stock A .15 (15%) Standard deviation of return 0.3...
Given the following information:
Expected return on Stock A .15 (15%)
Standard deviation of return 0.3
Expected return on Stock B .18 (18%)
Standard deviation of return 0.4
Correlation coefficient of the returns on Stock A and Stock B
0.75
a. What are the expected returns and standard deviations of the
following portfolios?
1. 100 percent of funds invested in Stock A
2. 100 percent of funds invested in Stock B
3. 50 percent of funds invested in each stock?...
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