ZuoTi.Pro
Question

You are planning to invest money in two securities A and B. The following information pertain...

You are planning to invest money in two securities A and B. The following information pertain to these securities:

State
Probability
Security A
Security B
Normal
40%
10%
12%
Recession
60%
2%
3%

What is expected return for a portfolio with an investment of $5,000 in security A and $5,000 in security B?

Select one:

a. 10.1%

b. 6.5%

c. 7.9%

d. 5.9%

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

A B State Puobability 12% Normal 40% 60% 10% 2% 3% (A+BJP 4.4% 1.5 5.99% Anstd). Recession Investment A = $5000 B = $5000 Rat

0 0
Add a comment
Know the answer?
Add Answer to:
You are planning to invest money in two securities A and B. The following information pertain...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You are planning to invest money in two securities A and B. The following information pertain...

    You are planning to invest money in two securities A and B. The following information pertain to these securities State Normal Recession Probability 40% Security A 10% Security B 12% 60% 3% What is expected return for a portfolio with an investment of $5,000 in security A and $5,000 in security B? Select one a 5.9% b. 7.99 c. 10.1% d. 6.5%

  • 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%...

  • Question Three Explain the effects of inadequate working capital to a firm An investor has an...

    Question Three Explain the effects of inadequate working capital to a firm An investor has an investment capital of Sh.2,000,000. He wishes to invest in two securities, A and B in the following proportion; Sh.400,000 in security A and Sh.1, 600,000 in security B. The returns on these two securities depend on the state of the economy as shown below: State of Economy Probability Return on Security A Return on security B Boom 0.4 18% 24% Normal 0.5 14% 22%...

  • Suppose your portfolio invest in two securities A and B. The proportional bid ask spread for...

    Suppose your portfolio invest in two securities A and B. The proportional bid ask spread for two securities are independent and normally distributed estimated as mean -0.5% and Sigma -0.1% for first security and mean -0.4% and Sigma -0.05% for second security. The current value of your portfolio is worth $20,000,000. The investment weights on each security are 60% and 40%. Please estimate the liquidity risk of your portfolio with 99% confidence level.

  • You decide to invest in a portfolio consisting of 25 percent Stock A, 25 percent Stock...

    You decide to invest in a portfolio consisting of 25 percent Stock A, 25 percent Stock B, and the remainder in Stock C. Based on the following information, what is the expected return of your portfolio? Sate of Economy Probability of State of Economy Return If State Occurs Stock A Stock B Stock C Recession .22 -14.8% -1.9% -20.8% Normal .47 11.0% 6.5% 15.1% Boom .31 24.6% 13.8% 29.7% Options: 10.43% 11.79% 10.88% 9.98% 12.86%

  • You have been given information about the performance of two securities, a Telecoms stock and a...

    You have been given information about the performance of two securities, a Telecoms stock and a Bank stock, over the past ten years in the table below. Based on this information, you have been requested to undertake a performance analysis with a view to forming a two-security portfolio. Year Telecoms Bank % % 2000 0.1 -4.5 2001 -16.1 42.7 2002 -28.3 14.5 2003 20.1 1.7 3.7 2004 21.5 2005 0.2 2.4 53.2 20.7 2006 2007 20.6 -18.9 2008 -28.0 -63.1...

  • You are considering investing in two securities, X and Y. The following data are available for...

    You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.09 0.02 Standard deviation of returns 0.04 0.06 Beta 1.00 0.85 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.45, compute the following: The expected return from the...

  • You are considering investing in two securities, X and Y. The following data are available for...

    You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.03 0.05 Standard deviation of returns 0.02 0.07 Beta 1.40 0.70 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.5, compute the following: The expected return from the...

  • Question 7 5 pts You are given the following information for Securities J and K for...

    Question 7 5 pts You are given the following information for Securities J and K for the coming year: State of Nature Probability 20.00% 50.00% 30.00% Return J 14.00% 19.00% 16.00% Return K 14.00% 16.00% 25.00% You create a portfolio, with 40 percent of your money invested in Security K. and the rest of your money invested in Security J. Given this information, determine the coefficient of variation (CV) of this portfolio for the coming year. Enter your answer with...

  • 6. Calculating Expected Return Based on the following information, calculate the expected return.

    6. Calculating Expected Return Based on the following information, calculate the expected return. State of EconomyProbability of State of EconomyRate of Return if State OccursRecession.15-.12Normal.60.10Boom.25.277. Calculating Returns and Standard Deviations Based on the following information, calculate the expected returns and standard deviations for the two stocks. State of EconomyProbability of State of EconomyRate of Return if State OccursStock AStock BRecession.10.02-.30Normal.50.10.18Boom.40.15.3110. Returns and Standard Deviations Consider the following information: State of EconomyProbability of State of EconomyRate of Return if State OccursStock AStock BStock CBoom.15.33.45.33Good.55.11.10.17Poor.20.02.02-.05Bust.10-.12-.25-.09a. Your...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT