Question

Consider the following two stocks. Probabilmesi ) SHOCK Recession Normal Boom 47% 16% The portfolio weights for stocks "A" and "Bare 0.1 and respectively What are the expected returns of stock "A" and "B"? Enter your answers as a percentage. Do not put the Round your answers to 2 DECIMAL PLACES. E(ra) = 7.66 Correct response 7.66 E() - 10.19 Correct responses 10.19 Click "Vetty to proceed to the next part of the question Using the correct answers from the previous question, what are the standard deviations of socks "Aand " percentage. Do not put the percent sign in your answer. Round your answers to 2 DECIMAL PLACES SDA Number SD = Number Click "Verity to proceed to the next part of Section Anempt 1 of 1 Verlty

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

2 D * 04:49 ENG 22-02-202016 fix OV557 OM X ON 00 OP OQ OR os OT OU OV 556 557 STOCK A SCENARIO PROB R ETURN 558 559 560 RETURN DEVIATION B- E(R) SQUARED DEVIATION (B-E(R))^2 EXPECTED RETURN A B -0.58% 0.72% 7.52% PROB SQUARED DEVIATION A* (B-E(R))^2 0.2706% 0.0521% 0.3269% 561 RECESSION NORMAL BOOM 0.29 0.24 0.47 -2.00% 3.00% 16.00% -9.66% -4.66% 8.34% 0.9332% 0.2172% 0.6956% 562 563 EXPECTED RETURN = 7.66% VARIANCE 0.6496% 565 566 ANSWER 1 STANDARD DEVIATION 8.06% [(SQRT(VARIANCE)) = SQRT(0.6496%)] 567 568 STOCKB SCENARIO 570 RETURN DEVIATION B- E(R) SQUARED DEVIATION (B-E(R))^2 572 573 PROB SQUARED DEVIATION A* (B-E(R))^2 0.1945% 0.5538% 0.7713% EXPECTED PROB R ETURN RETURN AB A B 0.29 2.00% 0.58% 0.24 -5.00% -1.20% 0.47 23.00% 10.81% RECESSION NORMAL BOOM -8.19% -15.19% 12.81% 0.6708% 2.3074% 1.6410% 574 575 576 EXPECTED RETURN = 10.19% VARIANCE 1.5195% 578 ANSWER 2 STANDARD DEVIATION 12.33% [(SQRT(VARIANCE)) = SQRT(1.5195%)] 579 con capm-portfolio retirement futures margin PV, FV, ANNUITY ACC CVP KE BOND HPR REALISED YIELD NPV RAK ROE std costing EPS%, ECONOMY ... 1