Homework Answers
Expected Return of Stock S =50%*20%+50%-30% =-5%
Standard Deviation of Stock S =(50%*(20%+5%)^2+50%*(-30%+5%)^2)^0.5
=25%
Correlation among same stocks =1
Standard Deviation of equally weighted portfolio will remain same
as correlation is 1
Hence standard deviation of stock S =25%
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Consider an economy with two types of firms, S and I. S firms always move together,...
Consider an economy with two types of firms, S and I. S firms always move together,...
Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 20% probability that the firm will have a 20% retum and a 80% probability that the firm will have a - 30% retum. The standard deviation for the return on an individual firm is closest to: O A. 8% OB. 10% O C. 20% OD. -20%
Consider an economy with two types of firms, S and I. S firms all move together....
Consider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 59 % probability that the firm will have a 24 % return and a 41 % probability that the firm will have a - 20 % return. What is the volatility (standard deviation) of a portfolio that consists of an equal investment in: a. 36 firms of type S? b. 36 firms...
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A. -5 %
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Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 50% probability that the firm will have a 20% return and a 50% probability that the firm will have a - 30% return. The standard deviation for the return on a portfolio of 20 type | firms is closest...
Consider an economy with two types of firms, S and I. S firms all move together....
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Consider the Hotelling model of the competition between two firms discussed in class. Select all that...
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Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 20% probability that the firm will have a 20% retum and a 80% probability that the firm will have a - 30% retum. The standard deviation for the return on an individual firm is closest to: O A. 8% OB. 10% O C. 20% OD. -20%
A. -5 %
B. 5.59%
C. 12.5%
D. 25%
Consider an economy with two types of firms, S and I. S firms always move together, but I firms move independently of each other. For both types of firms there is a 50% probability that the firm will have a 20% return and a 50% probability that the firm will have a - 30% return. The standard deviation for the return on a portfolio of 20 type | firms is closest...
Consider an economy with two types of firms, S and I. S firms
all move together. I firms move independently. For both types of
firms, there is a 60% probability that the firms will have a 15%
return and a 40% probability that the firms will have a −10%
return. What is the volatility (standard deviation) of a portfolio
that consists of an equal investment in 20 firms of (a) type S, and
(b) type I?
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QUESTION 6 Consider the Hotelling model of the competition between two firms discussed in class. Select all that apply. a.If both firms are localized in position 1/2 (i.e., center of the line), neither firm has incentives to deviate and move to a different position. D. If Firm 1 is located at position 1/2 (i.e., center of the line) and firm 2 is located somewhere else, then both firms have incentives to deviate and change their position along the line. C....
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