(13-3) You want to assess the expected return and risk of your portfolio, which contains three...
(13-3) You want to assess the expected return and risk of your portfolio, which contains three stocks. You are basing your assessment on a simple forward-looking model based on three states of the world. The weights in your portfolio are 25% in Stock A, 45% in Stock B and 30% in Stock C. Your assessment of the probable returns of these three stocks in the states of the world are given in the table below. Prob Stock B Stock C...
Consider the following information: Rate of Return if State Occurs State of Economy Boom Good Probability of State of Economy 0.25 2.15 0.30 0.30 Stock A 0.23 0.12 -0.02 -0.18 Stock B Stock C 0.39 0.26 0.15 0.16 -0.12 -0.03 0.18 0.11 Poor Bust a. Your portfolio is invested 35 percent each in A and C and 30 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent...
(13-1) You are trying to make a forward assessment of the risk and return of a stock that you are considering. You have developed what you consider a reasonable model of the performance of this stock based on five States of the World. Below are your estimates of the probabilities of the States of the World and the associated returns on the shares. State of the World Probability Return Boom 10% 25% Healthy 20% 15% Normal 40% 7% Weak 20%...
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?
Please answer all 3 questions State of Economy Boom Good Poor Bust Rate of Return if State Occurs Probability of State of Economy Stock A Stock B Stock C 0.10 0.18 0.48 0.33 0.30 0.11 0.18 0.15 0.40 0.05 -0.09 -0.05 0.20 -0.03 -0.32 -0.09 a. Your portfolio is invested 25 percent each in A and C and 50 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a...
Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom 0.10 0.18 0.48 0.33 Good 0.30 0.11 0.18 0.15 Poor 0.40 0.05 -0.09 -0.05 Bust 0.20 -0.03 -0.32 -0.09 a. Your portfolio is invested 25 percent each in A and C and 50 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal...
Consider the following information: Rate of Return if State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom 0.58 0.07 0.15 0.33 Bust 0.42 0.16 0.06 − 0.06 a. What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Expected return % b. What is the variance of a portfolio...
Consider the following information: Rate of Return if State OccursState ofProbability of StateEconomyof EconomyStock AStock BStock C Boom.60 .18 .04 .31 Bust.40 .03 .16 –.11 a.What is the expected return on an equally weighted portfolio of these three stocks? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)b.What is the variance of a portfolio invested 20 percent each...
Rajat has $1,000 to invest in three stocks let Si be the random variable representing the annual return on $ 1 invested in stock ‘i’. Thus, if Si = 0.12, $1 invested in stock i at the beginning of a year was worth $1.12 at the end of the year. We are given the following information: E(S1) = 0.14, E(S2) = 0.11, E(S3) = 0.10; var(S1) = 0.20, var(S2) = 0.08, var(S3) = 0.18; cov(S1, S2) = 0.05, cov(S1, S3)...
Rate of Return if State Occurs State of Economy State of Economy Stock A Stock B Stock C Boom Probability of 0.18 0.11 0.48 0.18 -0.09 0.32 0.33 0.15 0.10 0.30 0.40 Good -0.05 -0.09 0.05 -0.03 Poor 0.20 Bust a. Your portfolio is invested 25 percent each in A and C and 50 percent in B. What is the expected return of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal...