Question
In: Finance
There is a 20 percent probability the economy will boom, 70 percent probability it will be...
There is a 20 percent probability the economy will boom, 70 percent probability it will be normal, and a 10 percent probability of a recession. Stock A will return 18 percent in a boom, 11 percent in a normal economy, and lose 10 percent in a recession. Stock B will return 9 percent in boom, 7 percent in a normal economy, and 4 percent in a recession. Stock C will return 6 percent in a boom, 9 percent in a normal economy, and 13 percent in a recession. What is the expected return on a portfolio which is invested 20 percent in Stock A, 50 percent in Stock B, and 30 percent in Stock C?
a.) 8.25%
b.) 9.50%
c.) 7.40%
d.) 8.33%
e.) 9.45%
Solutions
jeff jeffy answered 2 years agoRelated Solutions
There is a 20 percent probability the economy will boom; a 20 percent probability of a...
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Consider 2 scenarios: Boom Economy and Normal Economy. The Boom economy has 20% chance of happening,...
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For each scenario (Boom and Normal), stock ABC has a return of
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Consider 2 scenarios: Boom Economy and Normal Economy. The Boom economy has 20% chance of happening,...
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economy has 20% chance of happening, while Normal economy has 80%
chance of happening. For each scenario (Boom and Normal), stock ABC
has a return of 25%, and 4%, respectively; stock XYZ has a return
of 10% and 6.5%, respectively; the market portfolio has a return of
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Consider 2 scenarios: Boom Economy and Normal Economy. The Boom economy has 20% chance of happening,...
Consider 2 scenarios: Boom Economy and Normal Economy. The Boom
economy has 20% chance of happening, while Normal economy has 80%
chance of happening. For each scenario (Boom and Normal), stock ABC
has a return of 25%, and 4%, respectively; stock XYZ has a return
of 10% and 6.5%, respectively; the market portfolio has a return of
12% and 5% respectively. 1) Calculate Expected return, Variance and
Standard deviation for stock ABC and XYZ 2) Based on your results
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B.
A portfolio consists of 35 percent Stock A, 54 percent Stock B,
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For these economic states, Stock A has deviations from its expected
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If the economy enters a boom, the stock of Company E will return 20% and the...
If the economy enters a boom, the stock of Company E will
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portfolio that is 70% stock A and 30% stock B? Enter your answer as
a percentage point without the % sign, and round it to the...
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