Question

Please answer all of questions A,B,C,D

Score: 1.25 of 15 pts 1 of 6 (2 complete) P8-21 (similar to) Expected return and standard deviation. Use the following information to answer the questions: a. What is the expected return of each asset? b. What is the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with 9% in asset J, 54% in asset K, and 37% in asset L? d. What is the portfolio's variance and standard deviation using the same asset weights from part (e)? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, only apply for the ans a. What is the expected return of asset J? 0.0600 (Round to four decimal places.) Data Table What is the expected return of asset K? (Round to four decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.) Retnam Return on State of Economy | Boom Growth Stagnant Recession Probably of Stal 027 0.36 Slate 0.060 0.060 0.000 0.060 Return on Aset K in State 0200 0.100 0.060 -0.140 State 0.250 0.180 0.080 -0.180 0.15 Print Done Enter your answer in the answer box and then click Check Answer. 10 remaining Clear All

Answer 1

х fix =+A3-$C$8 D3 A В C E F 1 Asset J Expected Probability [(P(r) return [rxP(r)= H 0.0162 0.0000 0.0216 0.0000 P(r)x(r-u)^2 2 Return (r) (r-)^2 3 6% 0.27 0.0000 0.0000 6% 4 0.36 0.0000 0.0000 6% 0.22 0.0132 0.0000 0.0000 0.0000 6 6% 0.15 0.0090 0.0000 0.0000 0.0000 7 8 Expected return 0.0600 Variance (o^2) Standard deviation (o) 0.0000 0.0000 10 11 12 Asset K Expected Probability [(P(r}] return P(r)x(r-u)^2 [rxP(r)= u] 0.0540 0.1178 13 Return (r) 20% 10% (r-H)^2 r-Hu 14 0.0037 0.27 0.0139 15 0.36 0.0360 0.0400 0.0016 0.0006 16 6% 0.22 0.0132 0.0000 0.0000 0.0000 -0.0210-0.2000 17 -14% 0.15 0.0400 0.0060 18 19 Expected return 0.0822 Variance (aA2) Standard deviation (o) 20 0.0103 0.1016 21 Lr LC

х fix +A25-$C$30 D25 A В C E F 23 Asset L Expected Probability [(P(r) return P(r)x(r-u)^2 0.0044 [rxP(r)= H 24 Return (r) (r-u)^2 r-u 25 25% 0.27 0.0675 0.1271 0.0162 26 18% 0.36 0.0648 0.0571 0.0033 0.0012 0.0176-0.0429 27 8% 0.22 0.0018 0.0004 0.02700.3029 28 -18% 0.15 0.0138 0.0917 29 30 Expected return 0.1229 Variance (oA2) 31 0.0197 Standard deviation (a) 0.1404 32

fix -H3-$J$8 КЗ А В с E F G Н K М Expected Expected Rate of returns if state Weighted returns if state portfolio Probability occurs (WeightxReturn) State of return [rxP(r)= H] return (r) [(P(r)] (r-H)^2 P(r)x(r-u)^2 1 economy occurs r-u 2 к L J К 0.54% 10.80% 3 Вoom 4 Growth 5 Stagnant Recession 6% 20% 25% 9.25% 20.59% 0.15 0.0309 0.0957 0.0092 0.00137 18% 12.60% 6% 10% 0.54% 5.40% 6.66% 0.0002 0.55 0.0693 0,0158 0.00014 6% 6% 8% 0.54% 3.24% 2.96% 6.74% (0.0428) 0.25 0.0169 0.0018 0.00046 -7.56% -6.66% (0.0068)(0.2470) 6% -14% -18% 0.54% -13.68% 0.00305 0.05 0.0610 Expected return 0.1102 8 Weights 0.09 0.54 0.37 Variance (o^2) 0.00502 9 10 Standard deviation (a) 0.0708 11

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