Expected Return in case of Above Average
=55%*37.20%+30%*27.30%+15%*41% =34.80%
Expected Return in case of Average =55%*17.80%+30%*6%+15%*13.6%
=13.63%
Expected Return in case of Below Average
=55%*-1.20%+30%*-4%+15%*-7% =-2.91%
Expected Return in case of Recession
=55%*-10.60%+30%*-6%+15%*-16.90% =-10.17%
Expected Return of Portfolio
=10%*34.80%+45%*13.63%+30%*-2.91%+15%*-10.17% =7.215%
Standard Deviation on portfolio
=(10%*(34.80%-7.215%)^2+45%*(13.63%-7.215%)^2+30%*(-2.91%-7.215%)^2+15%*(-10.17%-7.215%)^2)^0.5
=13.07%
The following table presents forecasted returns for three companies under various potential states of the economy:...
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