Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 0.26 0.17...
Consider the following information:
State Probability Stock A Stock B Stock C
Boom 0.65 0.26 0.17 -0.10
Bust 0.35 0.19 -0.13 -0.05
What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of 1/3)
Homework Answers
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
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Consider the following information:
State Probability Stock A Stock B Stock C
Boom 0.65 0.26 0.17...
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 -0.11 0.23...
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 -0.11 0.23 0.26 Bust 0.35 0.16 0.03 -0.08 What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of 1/3) Enter the answer with 4 decimals (e.g. 0.1234).
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability...
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.74 0.26 Stock A 0.15 0.17 Stock B Stock C 0.29 0.05 0.09 0.13 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 10 percent each in A and B and 80 percent in C?
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability...
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.76 0.24 Stock A 0.05 0.11 Stock B 0.33 0.19 Stock C 0.33 0.03 a. What is the expected return on an equally weighted portfolio of these three stocks?
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability...
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.64 0.36 Stock A 0.29 0.07 Stock B Stock C 0.31 0.13 0.27 0.05 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?
Consider the following information: Rate of Return if State Occurs State of Economy Probability of...
Consider the following information: Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Stock C Boom 0.70 0.07 0.09 0.29 Bust 0.30 0.19 0.09 0.17 Requirement 1: What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.) (Click to select)15.00%17.50%27.03%29.80%9.27% Requirement 2: What is the variance of a portfolio invested 20 percent each in A and B and...
Consider the following information about three stocks: State of Economy Probability of State Rate of Return...
Consider the following information about three stocks: State of Economy Probability of State Rate of Return if State Occurs Stock A Stock B 0.24 0.36 0.17 0.13 0.00 -0.28 Boom Normal Bust 0.35 0.50 0.15 Stock C 0.55 0.09 -0.45 a. What is the expected return of Stock A? The standard deviation? (6 points) b. If your portfolio is invested 40% each in A and B and 20% in C, what is the portfolio expected return? The standard deviation? (13...
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.32 0.02 0.08...
Consider the following information: State Probability Stock A Stock B Stock C Boom 0.32 0.02 0.08 0.05 Bust 0.68 -0.12 0.18 0.07 What is the expected return of a portfolio that has invested $11,537 in Stock A, $1,428 in Stock B, and $8,980 in Stock C? (Hint: calculate weights of each stock first). Enter the answer with 4 decimals
Consider the following information about three stocks: Probability of Rate of Return if State of Economy...
Consider the following information about three stocks: Probability of Rate of Return if State of Economy State State Occurs Stock A Stock B Stock C 0.24 Boom 0.35 0.36 0.55 0.13 Normal 0.50 0.17 0.09 -0.28 Bust 0.15 0.00 -0.45 a. What is the expected return of Stock A? The standard deviation? (6 points) b. If your portfolio is invested 40% each in A and B and 20% in C, what is the portfolio expected return? The standard deviation? (13...
Given the following information about the returns of stocks A, B, and C, what is the...
Given the following information about the returns of stocks A, B, and C, what is the expected return of a portfolio invested 30% in stock A, 40% in stock B, and 30% in stock C? State of economy Probability Stock A Stock B Stock C Boom 0.16 0.35 0.2 0.25 Good 0.29 0.17 0.2 0.13 Poor 0.21 0.01 0.03 0.08 Bust -- -0.16 -0.19 -0.18 Enter answer in percents.
Rate of Return if State Occurs State of Economy Probability Stock A Stock B Stock C...
Rate of Return if State Occurs State of Economy Probability Stock A Stock B Stock C Boom 0.15 0.30 0.45 0.33 Good 0.45 0.12 0.10 0.15 Poor 0.35 0.01 -0.15 -0.05 Bust 0.05 -0.20 -0.30 -0.09 Your portfolio is invested 30% each in A and C and 40% in B. What is the expected return of the portfolio? What is the variance of this portfolio? The standard deviation?
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.74 0.26 Stock A 0.15 0.17 Stock B Stock C 0.29 0.05 0.09 0.13 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 10 percent each in A and B and 80 percent in C?
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.76 0.24 Stock A 0.05 0.11 Stock B 0.33 0.19 Stock C 0.33 0.03 a. What is the expected return on an equally weighted portfolio of these three stocks?
Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.64 0.36 Stock A 0.29 0.07 Stock B Stock C 0.31 0.13 0.27 0.05 a. What is the expected return on an equally weighted portfolio of these three stocks? b. What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C?
Consider the following information about three stocks: State of Economy Probability of State Rate of Return if State Occurs Stock A Stock B 0.24 0.36 0.17 0.13 0.00 -0.28 Boom Normal Bust 0.35 0.50 0.15 Stock C 0.55 0.09 -0.45 a. What is the expected return of Stock A? The standard deviation? (6 points) b. If your portfolio is invested 40% each in A and B and 20% in C, what is the portfolio expected return? The standard deviation? (13...
Consider the following information about three stocks: Probability of Rate of Return if State of Economy State State Occurs Stock A Stock B Stock C 0.24 Boom 0.35 0.36 0.55 0.13 Normal 0.50 0.17 0.09 -0.28 Bust 0.15 0.00 -0.45 a. What is the expected return of Stock A? The standard deviation? (6 points) b. If your portfolio is invested 40% each in A and B and 20% in C, what is the portfolio expected return? The standard deviation? (13...
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