Question

1. The standard deviation of the returns for asset A is ________. Enter your answer as precent rounded to 1 decimal, do not include the percent sign.

Returns (%) 10 Possible Outcomes Pessimistic Most likely Optimistic Probability 0.25 0.45 0.30

2. Given the returns of two stocks J and K in the table below over the last 4 years. Find the standard deviation of holding a portfolio of 40% of stock J and 60% in stock K over the last 4 years. Enter your answer as a percent, round to one decimal, do not include the % sign.

​	Stock J	Stock K
2015	10%	9%
2016	12%	8%
2017	13%	10%
2018	15%	11%

Answer 1

1) Asset A Expected return Return-Expected Return Deviation variance Deviation 2 d2*probability probability Return prob return -0.027 Pessimistic 0.25 0.10 0.025 0.000729 0.00018225 Most likely -0.007 0.45 0.12 0.054 0.000049 0.00002205 optimistic Total 0.048 0.30 0.16 0.033 0.001089 0.0003267 0.127 0.000531 Expected return Standard deviation 0.000531 (1/2) 0.127 12.70% 0.023043437 2.30% 2.30

fox H15 -G15 D E F G H Asset A Expected return Return-Expected Return variance d2 probability probability prob return Deviation 2 - H8.H8 - H9.H9 Return Deviation Pessimistic Most likely -F8-SGS11 18 E8 19 . E9 0.1 0.25 - E8 . F8 =F9-SG$ 11 -F10- SG$11 0.45 - E9 . F9 0.12 0.3 = 1 10 ° E10 - SUM (J8 J 10 ) - E10 F10 - SUM (G8:G10) H10° H10 optimistic 0.16 Total - G11 I-J11 (1/2) 614 |-G15 Expected return 0.000531 (1/2) Standard deviation 2.3