Homework Answers
Given
| Probability | Project A return | Project B Return |
| 0.25 | 0.06 | -0.2 |
| 0.5 | 0.03 | 0.08 |
| 0.25 | -0.06 | 0.4 |
| Mean | 0.01 | 0.09 |
Covariance = sum of (X1 - mean of X)*(Y1 - mean of Y)*probability of its occurrence
So covariance = (0.01-0.06)*(0.09+0.02)*0.25 + (0.01-0.03)*(0.09-0.08)*0.5 + (0.01+0.06)*(0.09-0.4)*0.25 = -0.009
Add Answer to:
Please help. -0.036 is incorrect.
Consider the expected outcomes of Projects A and B: State of...
Options for the second blank are (expected return or standard deviation) Consider the expected outcomes of...
Options for the second blank are (expected return or standard
deviation)
Consider the expected outcomes of Projects A and B: State of Nature Probability of Occurrence Project A Return Project B Return Recession 0.25 0.06 -0.20 Average Growth 0.50 0.03 0.08 Prosperity 0.25 -0.06 0.40 Project Bis than Project A because the is higher riskier safer You can check your answer i more times before the question is hoed
Consider the following information: Rate of Return if State Occurs State of Economy Probability of...
Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Recession 0.20 0.03 -0.19 Normal 0.70 0.08 0.15 Boom 0.10 0.12 0.31 Required: Given that the expected return for Stock B is 9.800%, calculate the standard deviation for Stock B. (Do not round your intermediate calculations.)
1. What is the EXPECTED RETURN for Asset A and B? 2.What is the STANDARD DEVIATION for Asset A and B? State...
1. What is the EXPECTED RETURN for Asset A and B?
2.What is the STANDARD DEVIATION for Asset A and B?
State of Economy Probability Asset A of State of Rate of Economy Return 0.3 0.13 0.5 0.06 0.2 -0.05 Asset B Rate of Return 0.08 0.05 -0.01 Boom Normal Recession
Show transcribed image text State of Economy Probability Asset A of State of Rate of Economy Return 0.3 0.13 0.5 0.06 0.2 -0.05 Asset B Rate of Return 0.08...
QUESTION TWO XYZ Ltd is considering three possible capital projects for next year. Each project has...
QUESTION TWO XYZ Ltd is considering three possible capital projects for next year. Each project has a 1- year life, and project returns depend on next year's state of the economy. The estimated return are shown in the table: State of the Probability Rate of Return economy of occurrence A B с Recession Average Boom 0.25 0.50 0.25 10% 14 16 9% 13 18 14% 12 10 Required: i. ii. iii. iv. Compute each projects expected rate of return Compute...
Consider the following information: State of Economy Probability of State of Economy Rate of Return If...
Consider the following information: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock A Stock B Stock C Boom 0.25 14% 15% 33% Bust 0.75 12% 3% -6% What is the expected return and standard deviation of returns on an equally weighted portfolio of these three stocks? 2. Consider the following information: State of Economy Probability of State of Economy Rate of Return If State Occurs Stock K Stock M Boom 0.10 25% 18%...
1. Assume that there are two assets and three state of economy as follow State Of Economy Probability Of State Of Economy Rate Of Return If State Occurs Asset A Asset B Recession 0.20 -0.15 0.20 Normal 0.50 0.20 0.30 Boom 0.30 0.60 0.40 Assume furthe
1. Assume that there are two assets and three state of economy as followState Of EconomyProbability Of State Of EconomyRate Of Return If State OccursAsset AAsset BRecession 0.20-0.150.20Normal 0.500.200.30Boom 0.300.600.40Assume further that Br. 15,000 invested in asset A and Br. 5,000 invested in asset B. Based on this information, answer the following questions.a) Compute expected returns and standard deviation of the portfolio à5Marks b) Compute covariance of the assets (CovAB) à2Marks c) If the assets...
Consider the following information: State Probability Stock A Stock B Stock C...
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.32 -0.06 0.25 -0.13 Bust 0.68 0.25 0.08 -0.12 What is the expected return of a portfolio that has invested $2400 in Stock A, $7900 in Stock B, and $8900 in Stock C? (Hint: calculate weights of each stock first). Enter the answer with 4 decimals (e.g. 0.1234).
Expected Return Expected Return Expected Return Probability A B C Best state 0.25 40% 25% 15%...
Expected Return Expected Return Expected Return Probability A B C Best state 0.25 40% 25% 15% Good state 0.25 30% 20% 12% Normal state 0.25 20% 15% 9% Poor state 0.25 10% 10% 6% beta - 1.8 1.1 0.7 Complete the following table. A B C Expected average return (e.g., 10.00%) % % % Standard deviation (e.g., 10.00%) % % % If a portfolio consists of A, B, and C is structured as follows, complete the table. A B C...
Expected Return Expected Return Expected Return Probability 0.25 Best state Good state Normal state Poor state beta 40%...
Expected Return Expected Return Expected Return Probability 0.25 Best state Good state Normal state Poor state beta 40% 30% 20% 25% 20% 15% 10% 1.1 15% 12% 9% 6% 0.25 0.25 10% 1.8 0.7 Complete the following table. A Expected average return (e.g., 10.00%) Standard deviation (e.g., 10.00%) If a portfolio consists of A, B, and is structured as follows, complete the table. А 0.20 Portfolio weight в с 0.30 0.50 Portfolio Expected average return (e.g., 10.00%)
Consider the following information: Probability ABC, Inc. State Return Boom 0.15 Normal 50 0.08 Slowdown 0.04...
Consider the following information: Probability ABC, Inc. State Return Boom 0.15 Normal 50 0.08 Slowdown 0.04 Recession -0.03 What are the expected return and standard deviation? a. 6%; 2.67% b. 8.05%; 5.17% OC.6%; 5.17% d. 8.05%; 2.67%
Options for the second blank are (expected return or standard
deviation)
Consider the expected outcomes of Projects A and B: State of Nature Probability of Occurrence Project A Return Project B Return Recession 0.25 0.06 -0.20 Average Growth 0.50 0.03 0.08 Prosperity 0.25 -0.06 0.40 Project Bis than Project A because the is higher riskier safer You can check your answer i more times before the question is hoed
1. What is the EXPECTED RETURN for Asset A and B?
2.What is the STANDARD DEVIATION for Asset A and B?
State of Economy Probability Asset A of State of Rate of Economy Return 0.3 0.13 0.5 0.06 0.2 -0.05 Asset B Rate of Return 0.08 0.05 -0.01 Boom Normal Recession
Show transcribed image text State of Economy Probability Asset A of State of Rate of Economy Return 0.3 0.13 0.5 0.06 0.2 -0.05 Asset B Rate of Return 0.08...
QUESTION TWO XYZ Ltd is considering three possible capital projects for next year. Each project has a 1- year life, and project returns depend on next year's state of the economy. The estimated return are shown in the table: State of the Probability Rate of Return economy of occurrence A B с Recession Average Boom 0.25 0.50 0.25 10% 14 16 9% 13 18 14% 12 10 Required: i. ii. iii. iv. Compute each projects expected rate of return Compute...
Expected Return Expected Return Expected Return Probability 0.25 Best state Good state Normal state Poor state beta 40% 30% 20% 25% 20% 15% 10% 1.1 15% 12% 9% 6% 0.25 0.25 10% 1.8 0.7 Complete the following table. A Expected average return (e.g., 10.00%) Standard deviation (e.g., 10.00%) If a portfolio consists of A, B, and is structured as follows, complete the table. А 0.20 Portfolio weight в с 0.30 0.50 Portfolio Expected average return (e.g., 10.00%)
Consider the following information: Probability ABC, Inc. State Return Boom 0.15 Normal 50 0.08 Slowdown 0.04 Recession -0.03 What are the expected return and standard deviation? a. 6%; 2.67% b. 8.05%; 5.17% OC.6%; 5.17% d. 8.05%; 2.67%
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