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Using the following data: Scenario Probability return K1 return K2 -10% 5% 0.2 30% 0% 0.4...
Suppose K1 and K2 have the following distribution: Scenario Probability return K1 return K2 w(1) 0.3...
Suppose K1 and K2 have the following distribution: Scenario Probability return K1 return K2 w(1) 0.3 -10% 10% w(2) 0.4 0% 20% w(3) 0.3 20% -10% (a) Find the risk of the portfolio with w1 = 30% and w2 = 70%. (b) Find the risk of the portfolio with w1 = 50% and w2 = 50%. (c) Which of the portfolios above (in part (a) and (b)), has higher expected returns?
need help with number 6 5. Suppose Ki and K, have the following distribution: Scenario Probability...
need help with number 6
5. Suppose Ki and K, have the following distribution: Scenario Probability return Ki return K, wi -10% 10% 0.4 0% 20% W3 0.3 20% -10% 0.3 وليد (a) (b) (c) Find the risk of the portfolio with wu = 30% and W2 = 70%. Find the risk of the portfolio with w1 = 50% and w2 50% Which of the portfolios above (in part (a) and (b)), has higher expected returns? 6. Using the data...
8. Consider the following Scenario Analysis: Scenario Probability Stock Return Bond Return Recession 0.2 - 4%...
8. Consider the following Scenario Analysis: Scenario Probability Stock Return Bond Return Recession 0.2 - 4% +12% Normal Economy 0.6 +12% +8% Strong Economy 0.2 +20% +5% Assume you have a portfolio that is weighted 40% in stocks and 60% in bonds. a) What are the expected rate of return and standard deviation of the portfolio? (12 points) b) Please explain BRIEFLY in words whether a rational investor would prefer to invest in the portfolio, in stocks only, or in...
Home assignment 4 Consider following information Probability of the state of economy Rate of return if state occurs StockA StockB boom normal a. b. c. 0.2 0.8 0.4 0.2 0.05 Calculate the expected...
Home assignment 4 Consider following information Probability of the state of economy Rate of return if state occurs StockA StockB boom normal a. b. c. 0.2 0.8 0.4 0.2 0.05 Calculate the expected return of Calculate the variance and standard deviation of each stock. Calculate the covariance between stock A and B returns and the correlation coefficient. Calculate the expected return of the portfolio (Portfolio!) consisting 40% of stock A and 60% of stock B. Calculate the variance and standard...
Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds...
Consider the following scenario analysis: Rate of ReturnScenarioProbabilityStocksBondsRecession0.20-5%14% Normal economy 0.60158Boom0.20 254Assume a portfolio with weights of .60 in stocks and .40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Do not round percent rounded to 1 decimal place.) Rate of Return Recession Normal economy Boomb. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as...
Using the same economic data, you have been asked to recommend the divestment of one of...
Using the same economic data, you have been asked to recommend the divestment of one of the SBUs and purchase of Company D with expected returns of Boom 18%, Normal 10%, Decline 2%. The % of portfolio for the new investment would be the same as the one sold. Which company do you suggest selling? What will be the portfolio return now? Scenario Probability Return A Return B Return C Boom 0.2 0.2 0.3 0.45 Normal 0.6 0.12 0.13...
5. Use the following information to complete the questions: State of Economy Probability that State will...
5. Use the following information to complete the questions: State of Economy Probability that State will Occur Return on Stock A Return on Stock B Return on Stock Recession 0.4 10% 15% 20% Boom 0.6 8% 4% 0% 8.8% 8.4% 8% Expected Return 0.20 0.50 0.30 Portfolio Weight 5a. Compute the expected return for the portfolio. 5b. Compute the variance and standard deviation for the portfolio.
For Problems 10 through 12: Consider historical data showing that the average annual rate of return...
For Problems 10 through 12: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 90 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 20% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 5% 10. Calculate the expected return and variance of portfolios invested in T-bills...
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 8 (0.2 points) Consider the following probability distribution of returns on stock XYZ. What is...
Question 8 (0.2 points) Consider the following probability distribution of returns on stock XYZ. What is the expected return of stock XYZ? (Enter your answer as a percentage rounded to 2 decimal places. For example, enter 8.43%, instead of 0.0843) Probability Return 0.20 -3% 0.40 12% 0.40 27% Your Answer: Answer units View hint for Question 8 Question 9 (0.2 points) Calculate the expected return on a portfolio that contains 30% of a stock with an expected return of 1%...
need help with number 6
5. Suppose Ki and K, have the following distribution: Scenario Probability return Ki return K, wi -10% 10% 0.4 0% 20% W3 0.3 20% -10% 0.3 وليد (a) (b) (c) Find the risk of the portfolio with wu = 30% and W2 = 70%. Find the risk of the portfolio with w1 = 50% and w2 50% Which of the portfolios above (in part (a) and (b)), has higher expected returns? 6. Using the data...
Home assignment 4 Consider following information Probability of the state of economy Rate of return if state occurs StockA StockB boom normal a. b. c. 0.2 0.8 0.4 0.2 0.05 Calculate the expected return of Calculate the variance and standard deviation of each stock. Calculate the covariance between stock A and B returns and the correlation coefficient. Calculate the expected return of the portfolio (Portfolio!) consisting 40% of stock A and 60% of stock B. Calculate the variance and standard...
Consider the following scenario analysis: Rate of ReturnScenarioProbabilityStocksBondsRecession0.20-5%14% Normal economy 0.60158Boom0.20 254Assume a portfolio with weights of .60 in stocks and .40 in bonds. a. What is the rate of return on the portfolio in each scenario? (Do not round percent rounded to 1 decimal place.) Rate of Return Recession Normal economy Boomb. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as...
5. Use the following information to complete the questions: State of Economy Probability that State will Occur Return on Stock A Return on Stock B Return on Stock Recession 0.4 10% 15% 20% Boom 0.6 8% 4% 0% 8.8% 8.4% 8% Expected Return 0.20 0.50 0.30 Portfolio Weight 5a. Compute the expected return for the portfolio. 5b. Compute the variance and standard deviation for the portfolio.
For Problems 10 through 12: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 90 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 20% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 5% 10. Calculate the expected return and variance of portfolios invested in T-bills...
Question 8 (0.2 points) Consider the following probability distribution of returns on stock XYZ. What is the expected return of stock XYZ? (Enter your answer as a percentage rounded to 2 decimal places. For example, enter 8.43%, instead of 0.0843) Probability Return 0.20 -3% 0.40 12% 0.40 27% Your Answer: Answer units View hint for Question 8 Question 9 (0.2 points) Calculate the expected return on a portfolio that contains 30% of a stock with an expected return of 1%...
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